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The energy ring opens – Newspaper Kommersant No. 125 (7326) of 07/14/2022

Lithuania offers Latvia and Estonia to disconnect ahead of schedule from the energy systems of Russia and Belarus, leaving the BRELL energy ring as early as 2024. Russian regulators are unaware of the talks but see no threat to the energy systems of central Russia and Kaliningrad. Analysts have doubts about the ability of the Baltic countries to quickly cut energy ties, estimating their additional costs for buying energy from the EU at €400 million a year.

Lithuania insists on disconnecting the Baltic countries from the energy systems of Russia and Belarus as early as 2024, that is, a year ahead of the plan. The country is already negotiating with Estonia and Latvia, the head of Litgrid (Lithuanian network operator) Rokas Masiulis said on July 13. He added that the European Commission is also participating in the discussion. We are talking about breaking the BRELL energy ring (Belarus, Russia, Estonia, Lithuania and Latvia).

The power systems of Russia, Belarus and the Baltic countries have shared telecommunications since the times of the USSR, which allows them to conduct physical and commercial power flows.

In 2001, the countries signed an intergovernmental agreement on BRELL, which includes, among other things, the synchronous operation of energy systems and mutual support of reserves in case of accidents.

The System Operator (SO, dispatcher of the energy system of the Russian Federation) told Kommersant that the Baltic countries did not start negotiations with them on withdrawing from BRELL.

Russian Energy Minister Nikolai Shulginov told Kommersant that “there are no risks for the Russian energy system.”

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He noted that on behalf of President Vladimir Putin, a set of measures has been implemented to ensure independent electricity and gas supply to all consumers in the Kaliningrad region. Three thermal power plants were built in the Kaliningrad region, the installed capacity of the region was increased to 1.9 GW with a maximum consumption of 810 MW in 2021.

The Baltic countries have long wanted to disconnect from the Russian energy system, but cannot do this due to a serious energy shortage. For example, Lithuania produced only 40% of its domestic electricity demand in 2021. The Baltic states increased the purchase of electricity from the Russian Federation, since such supplies were more profitable. In 2021, Russia increased exports to this region by 37%, to 4.7 billion kWh.

Gitanas NausedaPresident of Lithuania, June 22:

“We are ready for unfriendly actions from Russia, such as disconnecting from the BRELL system or others.”

Russia has stopped exporting electricity to the Baltic countries since May of this year, citing problems in cash settlements on the NordPool exchange. According to Kommersant’s sources, about 1.8 billion kWh were supplied from central Russia and the Kaliningrad region to the Baltic states.

Kirill Stepanchenko from Vygon Consulting believes that the stoppage of electricity imports from the Russian Federation became possible due to low demand in the summer and the use of power lines from the EU and Scandinavia at almost full capacity. In his opinion, the withdrawal of the Baltic countries from BRELL is possible only after the launch of the 700 MW Harmony link from Poland, which is scheduled for 2025.

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Regina Lyanzberg from Kept believes that technically nothing prevents the disconnection of the energy systems of the Baltic countries from the unified energy system of Russia. Previously, there was a problem of balancing the Baltic energy systems, but now it can be done through energy bridges with the EU – LitPol Link (Lithuania-Poland) and NordBalt (Lithuania-Sweden). For Belarus, the BRELL break can also pass without consequences, since it has enough ties with Russia, the analyst notes.

“With a complete rejection of Russian electricity, more expensive thermal generation will have to be used, which can lead to additional costs of about €250 million, as well as payments for CO2 emissions in the amount of about €150 million per year,” warns Kirill Stepanchenko.

Ekaterina Makeeva, a partner at the A-PRO law firm, notes that the BRELL agreement provides for a procedure for unilateral termination of the contract: such a party must notify others six months in advance. At the same time, the force majeure section provides for exemption from liability for non-performance of obligations if performance is hindered, in particular, by wars or military operations of any nature, the lawyer points out. In the current conditions, Ekaterina Makeeva believes, this wording can be used as a justification for avoiding responsibility.

Polina Smertina

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