Energy to Central Europe
Trends and opportunities
The Central European (CE) region is economically significant with a population in excess of 120 million and is well connected to the 500 million European Union (EU) market. The positive economic outlook together with a strong flow of Foreign Direct Investments and EU structural funds, low labour costs and private and public sector modernisation means that this is a market of considerable potential for Australian organisations.
The energy sector in Europe and the CE region is undergoing a fundamental transformation as the region seeks to ensure its energy security. The catalyst for this transformation was the interruption to gas supplies during the Russian-Ukraine dispute in 2009. The current instability in Ukraine, a key transit country for Russian gas and coal supplies, has heightened energy security concerns in the EU. This prompted the release in May 2014 of a European Energy Security Strategy (PDF) that contains initiatives to ensure energy supply and efficiently operating energy markets in the region.
The energy mix in the EU has been transformed over the last two decades with a strong decline in coal consumption (by 37 per cent) being offset by a significant increase in use of gas (30 per cent) and renewables (152 per cent) (Source: EIA, International Energy Statistics,3 Feb 2015). With the shift to gas and renewables for energy generation, the EU continues to source more than 53 per cent of its energy needs from outside of the region, with Russia alone supplying 39 and 33 per cent of imported gas and oil respectively. Specifically, the EU imports 90 per cent of its crude oil, 66 per cent of its natural gas, 42 per cent of its coal and other solid fuels, 40 per cent of its uranium and other nuclear fuels (Source: European Commission, European Energy Security Strategy: Security of energy supply, August 2014).
This situation is more acute in the countries that were part of the Soviet Union’s sphere of influence. Resulting in the gas and electricity infrastructure of CE being orientated towards the east, whereas their dominant economic and political relationships are now looking west as countries such as Poland and the Czech and Slovak Republics have joined the EU.
The Central European region is seeking to improve its domestic energy supply by releasing new conventional and unconventional oil and gas concessions. This will be supplemented by the establishment of new liquefied natural gas (LNG) import terminals in Świnoujście (Poland) and Lithuania. A project is being considered on Krk Island in Croatia, which once networked, will create a European North-South gas corridor.
Iwona Woicka-Żuławska, the deputy director of the economic co-operation section of Poland’s Ministry of Foreign Affairs, indicated that the Polish Government supported buying Australian LNG and could use an import terminal on the Polish coast that is scheduled to open next year (Source: Australian Financial Review, Polish interest supports Australia’s plans for LNG sector, 3 Nov 2014).
Governments and industries alike are fundamentally committed to dramatically improving energy supply and security and are expected to remain so in the medium to longer term.
Australia’s emergence as a global energy player and the capability of its resource and energy businesses are capturing the attention of governments across the Central European region.
Factors shaping energy investments include:
- creation of an effective European energy market
- building resilience to supply disruptions by improving energy efficiency
- storage facilities
- connectivity of gas and electricity networks across Europe
- securing other sources of energy supply from within and outside the EU.
There is approximately EUR200 billion in gas and electricity network infrastructure projects planned across Europe (Source: European Commission, Connecting energy markets and regions, Feb 2015). With opportunities in the exploration and development of new energy fields, energy efficiency, power and heat generation plants, offers prospects for Australian firms.
The opportunities include providing:
- Mining technologies and services that reduce the cost of existing coal extraction and processing facilities
- Services and technology for developing and managing the enhanced gas and electricity networks
- Technology, solutions and services for renewing existing and developing new electricity and heat generation plants
- Assistance to explore and develop new energy fields, including the shale and unconventional gas fields in Poland and new offshore gas on the Adriatic coast. For further information download 'Shale Gas in Poland - an Opportunity or a Chimera?' (PDF).
- Oil and gas services to support these new resource developments.
- Gas pipeline opportunities. For further information download 'Gas Pipeline Opportunities in Central Europe' (PDF - 562KB)
Australian companies from energy sector currently operating on the Polish market:
- Subsea Engineering Associates is a provider of quality Project and Engineering Management supporting the local and global Subsea Oil & Gas industry, a subcontractor for CalEnergy working with LOTOS Petrobaltic on the Baltic Sea project.
- Strzelecki Energia (Hutton Energy) exploration of unconventional gas and shale gas.
- Linc Energy is establishing an underground coal gasification demonstration plant in Poland.
- Prairie Mining Limited (PD Co) is a hard coal exploration and development company that has a 182km2 concession in the Lublin region with a JORC Coal Resource Estimate of 1.6 billion tonnes.
- Balamara Resources, exploration and development of hard coal. The company’s Nowa Ruda project in Southern Poland is currently undertaking a drilling program to assess the resources to JORC standard.
Mining equipment, services and technology:
Links and industry contacts
Ministry of Economy
URE (Urząd Regulacji Energetyki)
EU Energy Commission
PSE (Polskie Sieci Elektroenergetyczne)
Energy producers and distributors:
PGE (Polska Grupa Energetyczna)
Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.
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