A discussion about the EU’s post-2020 multiannual budget priorities kicked off an informal meeting of European leaders in Brussels on February 23.
With major delays in 2014-2020 EU budget adoption and the UK’s departure from the bloc scheduled for the late March 2019, the importance of these talks can hardly be overstated as experts expect Britain to leave an annual shortfall of more than €12 billion, post-Brexit.
A lack of consensus currently exists amongst the EU 27 leaders, both on strategic budget setting issues, as well as on key sectoral program investments (cohesion policy, CAP, climate, energy, etc.). According to European Commission President Jean-Claude Juncker, some 14-15 member states claimed a willingness to pay more into the budget to balance the deficit. A number of key donors to the EU budget, including the Netherlands, Austria, Sweden, and Denmark, have refused the possibility of an increase.
“We, in any case, do not want to see our contribution rising,” Dutch Prime Minister Mark Rutte said on the sidelines of the meeting.
Regarding the development of strategic sectors of the economy, Juncker was categorical in his statements that structural funds and farm subsidies, accounting for around 70% of the EU expenditure, would suffer cuts.
This poses a threat to the development of related key sectors, including transport and energy. Both of are of a particular importance for the EU in the light of the Climate Change program. It’s also noteworthy that one of the aims here is to have a 20% share of the European budget climate related.
All of the EU-27 leaders are thus looking for a clear understanding of the long-term energy transition investments to create precise state development strategies, including the annual ZF Power Summit held in Romania in mid-February, aimed at defining the main national energy sector growth areas and major challenges.
“Energy sector in our country is working in the dark subject to the absence of the local multiannual investment strategy. Our state should develop a document that would designate guidelines for the economic development. This is our no. 1 need for today,” said Corneliu Bodea, president of the Romanian Energy Center
Romania can be southeastern Europe’s energy hub, bringing a significant improvement through further natural resources development. Bucharest’s National Agency for Mineral Resources (NAMR) head Sorin Gal stressed that the country may double its current gas production on the Black Sea perimeters for a period of 20 years.
“When all the current off-shore projects function at full capacity, some 9-10 billion cubic metres of gas will come from the Black Sea each year for a period of 20 years, which will bring royalties of €2.8 billion to the state budget,” Gal said at the ZF Power Summit.
Romania’s Black Sea perimeters are being explored both by large international and local players, including ExxonMobil and OMV Petrom, LUKOIL, Romgaz, and Black Sea Oil and Gas.
The project’s promising outlook may easily be confirmed by the fact that LUKOIL discovered a gas field in the Romanian Black Sea perimeter in October 2015 with an estimated 30 billion cubic metres gas reserves.
The company’s representative pointed out at the ZF Power summit that the Current global energy mix consists of 20% renewables and 80% traditional sources. Demand for traditional fuels is to remain stable in the nearest future but is expected to grow after 2030.
LUKOIL plays a significant role in Romania’s energy mix contributing to oil and gas exploration, as well as refining, supply retail, and renewable electricity projects. The company’s total investments in these projects exceeded €246 million, while another €24.6 million will be directed to the further modernisation of the PETROTEL-LUKOIL refinery in Ploiesti by the end of 2020.
However, the further development of this and other energy companies in Romania and the EU hinges on the adoption of a well-thought-out EU-wide budget that will provide for long-term national and European projects development. Any delay or an unbalanced approach may cause significant harm to the EU-27 economic growth momentum.
The European Council will present its budget proposals in May, and according to European Council President Donald Tusk, the Council’s ambitious plans for adoption of the EU budget will be difficult to implement.
Stacey Muss Jr is an independent energy analyst.