Lithuania and Poland Are Challenging Russian and Belarusian Energy Structures in the Baltics
Both Lithuania and Poland are attempting to challenge Russian and Belarusian energy dominance in the Baltics. Although Poland is trying to wean itself off Russian energy reliance, Lithuania is acting far more aggressively by attempting to force Latvia to follow their anti-Russian/Belarusian agenda.
The Lithuanian Seimas (Parliament) called for strict political pressure on neighboring Latvia, a fellow Baltic member of the EU and NATO. This response by the Seimas is because of Latvia’s pragmatic desire to ensure energy security through trade relations with Russia and Belarus.
The Lithuanian Seimas agreed that relations with Latvia needed to move from friendly appeals to direct political pressure, which also includes threats and blackmail. The Seimas Committee on European Affairs called on the Conservative-led new government to increase pressure on Latvian leaders in Riga over alleged violations of Latvia’s 2018 tripartite agreement on electricity trade with third countries.
Latvia buys electricity produced by the Belarusian Astrava nuclear power plant, and this is a major problem for Lithuanian leaders. Lithuania considers the Astrava power plant to be a threat, not only to the health of the Lithuanian citizens, but also to the energy security of the entire European Union.
“After the start of operation of the Belarusian nuclear power plant, the analysis of electricity flows shows that Latvia successfully sells the electricity entering Lithuania through the Lithuanian-Belarusian connection, which remains exclusively in Lithuania. In this way, Lithuanian consumers finance Lukashenko’s regime,” said MP Dainius Kreivys from the conservative Homeland Union Party.
This means that calls for political pressure against Riga are not empty words, but an action program of the Lithuanian government. This pressure will also come with approval from Brussels and Washington as they claim Belarusian President Alexander Lukashenko is illegitimate. Thus, Minsk and Moscow must prepare for a difficult confrontation not only on the political front, but also on the Baltic energy one.
Baltic States are rapidly preparing to synchronize their energy networks with Europe so they can disconnect from the BRELL (Belarus, Russia, Estonia, Latvia, Lithuania) energy ring in 2025. This means that Vilnius and Riga will have to rely mainly on Poland and a submarine power cable with Sweden, which breaks several times a year.
It becomes clear that from 2025, Riga will become fully dependent on European electricity transit through the territory of Lithuania. It is clear that transit must also be paid for, meaning Latvia will become entirely reliant on Lithuania for the sake of European electricity. This is especially curious considering electricity from the Belarusian nuclear power plants is perhaps the closest source of cheap energy.
Approved by the Ministries of Energy of the three Baltic States, Latvia and Estonia reserve the right to import missing amounts of electricity from Russia until their complete disconnection from BRELL. However, according to Lithuanian conservatives, there is no guarantee that Russia will not supply electricity via Belarus to Latvia and Estonia. This means that there is a real threat that this so-called “dangerous electricity” will enter the Lithuanian and pan-European electricity networks. It is this uncertainty that causes much outrage in the new Lithuanian government. Thus, Riga must be ready for the Lithuanians to try and overthrow their government in the next four years and essentially turn Latvia into their vassal.
Lithuania’s pressure against Latvia also comes at a time when Russian state-owned Gazprom has applied for changes in the price of gas supplied to Poland under the Yamal contract. The Polish oil and gas company PGNiG expressed confidence that Gazprom did not meet their contractual requirements. Poland has previously asked for gas prices to be reviewed and reduced; however, this is not provided for in the contract.
An agreement on the supply of gas to Poland was concluded in 1996 to the tune of about 10 billion cubic meters per year. This agreement does not conclude until 2022. In addition, Warsaw must receive at least 8.7 billion cubic meters under the “take it or pay it” rule. Poland’s reaction is all the more surprising given that the country has no plans to extend the long-term gas supply agreement with Russia anyway. Moreover, Poland is filing counterclaims.
Earlier this year, a Polish company won a dispute over the revision of gas prices for supplies from November 2014. Gazprom transferred $1.5 billion to PGNiG, but is still challenging the decision in the Court of Appeal. This is a significant risk for Warsaw as it may lose more than one lawsuit as a result. This penalty – compensation for Gazprom’s allegedly high prices when Poland went to arbitration in spring 2015 – gave the impression that the gas price was not in line with the situation on the European energy market.
In addition, this autumn Poland filed a new $7.6 billion claim against Gazprom’s Nord Stream 2 pipeline. Poland does not consider itself a major consumer of gas but rather a potential energy hub despite having no gas distribution center, no free gas volume, and no business approach. Rather, Warsaw is hinging its bets on the Baltic Pipeline which intends to connect Poland with Norwegian energy via Denmark by October 2022.
However, there is a noteworthy nuance: the construction of the pipeline requires permission from Nord Stream and Nord Stream 2, and one of the main shareholders of both companies is Gazprom.
Therefore, no matter what Poland attempts, it finds itself in the same position – needing to cooperate and coordinate with Russia to achieve its energy interests. The rest of the Baltics is in this same position too, and although Latvia may recognize this reality, Lithuania is still trying to bully its Baltic neighbor to move it away from Russian and Belarusian energy sources.