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How could gas become cheaper in Central and Eastern Europe?Published: 1 of September, 2012

In connection with the Ukrainian-Russian gas dispute of January 2009 the transit pipeline leading to Central Europe was turned off for a few days, instantly bringing the security of supply related exposure of the former Socialist countries to spotlight. Since then it has been expressed on many occasions, that the gas dependency from the Russian partner carries serious risks, that can be eased through the diversification of sources, strengthening the infrastructural connection to the Western European gas network, establishing physical connections among Central European countries, and developing existing pipelines to be bi-directional. In part, these are made compulsory by the 2010 security of gas supply regulation of the EU, while the 10 year network development plans contain the proposed investments of Member States on the development of cross-border and storage capacities. In addition to security of supply considerations, another noteworthy benefit generated by network development is that the natural gas wholesale purchase price of the region comes closer to Western European prices (represented by the spot prices of the Dutch exchange [TTF prices] in our model), which, for recent years, have been substantially lower than the wholesale prices of the Danube Region (the markets of which are heavily influenced by TOP contracts).

Based on its modelling work REKK set out to identify the infrastructural projects, or combinations of projects that could reduce the annual gas bill of the whole region by the largest proportion, and also examined in which case would the incorporation of new sources generate the most saving for the region.