The V4’s Gas Market transition towards the EU’s Energy Security

Abstract

Current development of the European gas market uncovers several new opportunities and challenges for energy security that developed from big changes in production, transit and supply ways of natural gas to Europe. New European gas market model builds on the principles of diversification, the security of supply, interconnectivity and liberalization. Realization of the EU Third Energy Package related to a progressive shift from long-term oil-linked gas supply contracts and development of alternative gas supply sources and lines, as well as the rivalry between already established gas transit lines and the new supply lines present new challenges and require transition for the V4 countries. In this article I studied what are the new changes and challenges of the transition of V4 countries towards the EU’s energy security? To adjust to transition V4 countries should build the new infrastructure on the short-term pricing market and the ways how it will be funded. If V4 countries want to trade gas with the neighbours and transport most of the Russian gas to Europe, they need to invest into reforms of pipelines’ networks or to find other alternatives of diversification in the next decades. Returns on investment on a liberalized market with a multitude of competitors will be manageable but require serious reforms. The V4 countries will have to enter into the spot markets to efficiently trade gas. Available gas hubs in Europe are much smaller, less liquid, and mostly supplied by the same companies as the long-term traded gas hubs. This kind of markets is easy to manipulate. Therefore, it is important for the V4 countries to plan how to coordinate their national energy policies and name EU’s energy targets for the future.