Strategic Autonomy and Energy Security in the Balkans: The Critical Role of EU Integration

10.58867/IGLB8397

According to the International Energy Agency (IEA), energy security can be defined as “the uninterrupted availability of energy sources at an affordable price” (IEA, 2021). However, in today's interconnected global landscape, this definition extends to include the diversification of energy sources to mitigate the risks associated with overreliance on a single country or supplier. This notion resonates with Winston Churchill’s famous dictum: "Safety and security lie in variety and variety alone." 

Energy security is not only critical to socioeconomic stability but also essential for maintaining autonomy from external political influences and coercive leverage. In other words, it is fundamentally a matter of sovereignty.[1] This is exemplified by Russia’s strategic use of its energy resources to shape relationships and exert power, particularly over European countries, including those in the Balkans. Diversification is, thus, essential to achieve energy security, reduce vulnerability, and enhance resilience against external political influences.

A Look from the Balkans

Given the Balkans' strategic location as the gateway to the European Union, and the fact that some Balkan states are already EU members while others are candidate members, it is evident that the region's energy security is intricately linked to the EU's energy policies and overall security. As history has shown, notably with the event triggering the First World War, the security of the Balkans holds significant implications for broader regional stability. This interdependence has become even more important in the aftermath of the Russian invasion of Ukraine in February 2022.

To provide a comprehensive understanding of the energy security of the Balkans, it is essential to first examine how the European Union is interpreting and responding to its own energy security challenges in the wake of the Ukraine invasion. Subsequently, we will analyze how the EU’s energy policy is shaping and affecting the energy security of the Balkans in the aftermath of the Russian invasion of Ukraine. This dual approach will offer a nuanced perspective on the interplay between EU-wide strategies and regional dynamics, highlighting the implications for both the EU and the Balkan states in their quest for a stable and diversified energy supply.

EU’s Energy Policy: The Reliance on Natural Gas in the Transition

Considering the rise of right-wing anti-net-zero populism across the West, [2]  the transition to a zero-carbon economy may take longer than anticipated. Thus, natural gas is expected to play a significant role as a transitional fuel, given its significantly lower emissions compared to coal and oil.  Notably, the European Commission has determined that natural gas and nuclear energy power plants can be classified as green energy generators. Consequently, natural gas, alongside nuclear power, is regarded as a sustainable investment, according to the EU. [3]  Natural gas is considered a crucial transitional fuel until at least 2050, if not beyond. [4]   This designation underscores its importance in bridging the gap between current energy practices and a future dominated by renewable energy sources, providing a reliable and relatively cleaner alternative to other fossil fuels during this period of transition.

In the wake of Russia's invasion of Ukraine in 2022, the European Union has found itself at a critical juncture in redefining both its energy security and foreign policy. The drastic reduction in Russian gas imports from 41 percent in August 2021 to a mere 8 percent by September 2022 underscores this pivotal shift in material terms. However, the EU has also carved out RePowerEU, an ambitious, all-in approach that aligns its energy security firmly within the remit of its foreign and security policy.  Is the EU still in the foothills of navigating the complexities of today’s European energy landscape, or is it attempting an innovative form of ‘multi-level’ foreign policy? To explore the consequences of these developments, this Centre for Britain and Europe [HAP(1] Briefing Paper delves into the multifaceted strategies employed by the EU. 

The first major policy response by the EU to the Russian invasion of Ukraine was its REPowerEU plan set up in May 2022. With its three-pronged strategy of saving energy, producing clean energy, and diversifying energy supplies, the REPowerEU represents an integrated approach aligning technological that aligns technological solutions with geopolitical considerations. Critics would argue that there is little new to the first two goals of energy efficiency and carbon-free energy production, as they essentially align with the overarching goals of the European Green Deal. What is new, however, is the EU’s determination to diversify energy supplies, radically redrawing its own energy security composition in terms of both non-fossil fuel use overall, and a gradual shut-off of Russian gas, upending its relations with Russia at a stroke. 

Weaning the entire European energy ecosystem off fossil fuels is effectively the end-goal for Europe, decoupling energy producers, industry, business and consumers from oil and gas use in a way that finally aligns with the earliest principles of the EU’s climate change commitments, while simultaneously reducing both its material vulnerability on, and political sensitivity to Russia. In this way, reduced vulnerability equates to enhanced self-sufficiency. This aligns nicely not only with foreign and security goals premised on increasing the strategic autonomy of the EU in key areas, including energy security, but less overall dependence on key strategic partners, including Russia. Another benefit may also be achievable, namely a more coordinated structure of collective energy security amongst the EU Member States, increasingly (and possibly permanently) managed by the European Commission itself. This goal, however, rests entirely upon the sustainability of the first two goals in terms of both energy and foreign policy.[5]

The initial sanctions against Russia driving down imports have arguably begun this process, with a significant net drop in oil and gas purchase, transit and use from Russian sources. However, diversifying the entire EU network, whilst aiming for an eventual sum-total fossil fuel turn-off presents a mammoth challenge; various reports suggest that the shift could not happen before 2050.[6] Diversification may therefore, take on two meanings. First, in terms of preferred suppliers, favoring Norway, Qatar, Azerbaijan, and North and sub-Saharan African suppliers over Russia. Second, in terms of sequencing, reducing oil supplies as a first step, whilst continuing to rely on natural gas, and reducing pipeline gas in favor of LNG supplies or diversifying options, to minimize potential disruption to various energy infrastructures. 

Against this backdrop, the EU's efforts to diversify natural gas sources and pipelines, including transition routes, will significantly enhance the energy security of the Balkans. This diversification will contribute to the region's strategic autonomy, reducing its vulnerability to potential Russian meddling and aggression. By investing in the energy infrastructure of the Balkans, the EU is also bolstering its own security, particularly considering the prospective future enlargement of the EU to include Balkan states.[7]

State of Energy in the Balkan States

(Source: Bankwatch Network cited in Bryza, 2024)

As the above-given table illustrates the heavy reliance on coal for energy production in Balkan countries, with natural gas not yet recognized as a significant transitional fuel towards renewable energy. Lignite coal, the dirtiest type, generates 95 percent of its electricity in Kosovo, which aspires to EU membership. North Macedonia produces 75 percent of its electricity from coal, while Serbia and Bosnia rely on coal for 70 percent and 63 percent of their electricity, respectively. In contrast, Montenegro and Albania utilize less coal and more hydropower. Montenegro generates 43 percent of its electricity from coal, 47 percent from hydropower, and 11 percent from wind and solar. Albania relies on hydropower for 99 percent of its electricity but imports electricity from neighboring countries that primarily use coal-fired plants.[8]  Not only non-EU countries in the region, but also some EU members in the region, such as Bulgaria, heavily rely on coal to generate electricity. As of this year, Bulgaria produces more than 40 percent of its electricity from coal.[9]

Serbia is strategically situated in the heart of the region, making it a potential transit country for natural gas to central Europe. At present, the country imports almost all of its gas from Russia, with gas comprising 15 percent of its energy mix. The previous long-term agreement with Gazprom expired at the end of 2021, but in May 2022, a new three-year contract was agreed upon.[10]

In 2007, Serbia signed an agreement with Russia, the Comprehensive Energy Agreement facilitated a significant increase in Serbia's energy dependence on Russia, thereby amplifying Russian influence in the Balkans.[11] As implication of this agreement Russia's state-controlled energy giant Gazprom Neft acquired a 51 percent stake in Serbia’s national oil company, NIS. This acquisition was part of a broader strategy to control crucial energy assets in Serbia, ensuring a steady flow of investment and modernization into the Serbian energy sector. 

The agreement included the commitment to construct part of the South Stream pipeline through Serbian territory. The South Stream was intended to transport Russian natural gas under the Black Sea to Europe via Bulgaria and Serbia, bypassing Ukraine, and was seen as a strategic project for both Russia and Serbia. This pipeline aimed to strengthen Serbia's role as a key transit country for Russian gas. However, the project was later canceled in 2014 due to geopolitical pressures and EU opposition following Russian annexation of Crimea in 2014.[12]

The February 2022 Russian invasion of Ukraine caused the Balkan countries to distance themselves from Russia, including Serbia, which was Russia's most reliable partner in the region. Serbia condemned the invasion and refused to recognize Russia's annexation. [13] However, despite the EU sanctions imposed on Russian energy, Serbia signed a three-year gas supply agreement with Russia in May 2022.[14] This highlights the difficulty of diversifying or weaning the Balkan countries, particularly Serbia, away from Russia without EU support in facilitating bringing in alternative energy sources. The Balkan countries have two options to decrease their dependence on Russian energy: either transition to green energy or replace coal with non-Russian natural gas during the transitional period. In the following section, we will explore alternative options for the Balkans.

Green-Energy  

As shown above in the table, the Balkan countries heavily rely on coal to generate power. They will either follow the European way of using a transitional fuel, gas, or will jump to green energy. Transitioning to green energy is the ideal long-term goal; however, this shift presents significant cost and logistical challenges, making it gradual. Transitioning to renewable energy sources requires substantial upfront capital investment in infrastructure such as wind turbines, solar panels, and energy storage systems. The economic situation in many Balkan countries is constrained, limiting the availability of funds for such investments.

In the interim, natural gas is a viable transitional fuel due to its lower emissions compared to coal and oil. Given the EU’s energy policies and Balkan countries' membership aspirations, the region's strategic importance cannot be overstated. The Balkans serve as a gateway to the EU, and enhancing energy security through diversification, including increased use of natural gas, strengthens their geopolitical significance. This approach aligns with the EU’s goals to reduce reliance on Russian energy and bolsters the region’s strategic value in EU relations. Consequently, transitioning to natural gas is a geostrategic step that enhances the Balkans' integration with the EU and contributes to regional stability and autonomy.

In light of this context, the following section will examine the region's possibilities and capabilities for obtaining natural gas from alternative sources.

TurkStream: Russia’s Trojan Horse in Balkans?

The TurkStream pipeline began its operations in January 2020. Despite its name, the pipeline does not transport Turkish gas; it was designed to transport Russian natural gas across the Black Sea to Türkiye and onward to Southern and Southeastern Europe. This alternative route aims to enhance the security and stability of Russian gas supplies to the region. The Balkan Stream gas pipeline, a continuation of TurkStream, underscores Russia’s enduring influence in the Balkans. Inaugurated one year before the Russian invasion of Ukraine, this project was championed by key regional leaders from Türkiye, Bulgaria, and Serbia. Russian energy influence remains significant despite the outbreak of war and subsequent geopolitical tensions. Notably, Russia halted gas supplies to Bulgaria in response to the conflict. However, Bulgarian authorities continued to allow the transit of Russian gas through their territory to Serbia and Hungary. Hungary, an EU member, emerges as the principal consumer of Russian gas in the Balkans, exemplifying how Russian energy strategies continue to penetrate the European Union.[15]

Gas from TurkStream was initially presented as an alternative to Russian gas, purportedly to circumvent sanctions on energy imports from Russia. Until the end of 2019, Gazprom supplied natural gas to the so-called southern direction in Europe, via Ukraine and Romania to Bulgaria, Türkiye, Greece and Macedonia. From 1 January 2020, transit started flowing in the opposite direction, coming from Türkiye via the second pipeline of the newly built Turkish Stream. The old route through Ukraine is no longer in use but Gazprom continues to possess its capacity rights. Bulgaria and Greece constructed an interconnector gas pipeline that links the Bulgarian gas network to the Trans-Adriatic Gas Pipeline, which carries gas from Azerbaijan. This connection also enables the transfer of LNG from Greek terminals and the import of LNG via the Balkan Stream. Currently, Bulgaria and Romania are not utilizing the potential of the Trans-Balkan gas pipeline, which was previously used as a route for the transit of Russian gas from Ukraine through Romania to Bulgaria. The Bulgarian authorities plan to reverse the direction of this pipeline and use it to transport gas from Bulgaria to Romania and Ukraine, is known as the Vertical Gas Corridor. This project is a joint venture between the gas companies of Greece, Bulgaria, Romania, Hungary, Slovakia, Moldova, and Ukraine to extend their existing gas connections.[16]

Southern Corridor: Türkiye [TANAP] as alternative to TurkStream

Türkiye is the key transitional route to Azerbaijani gas and Kurdish gas. 

Türkiye has the potential to fulfill the energy demands of the Balkan region and  Europe as a whole. Although Türkiye itself lacks significant oil and gas resources, it is surrounded by energy-rich neighbors. Iraq boasts 143 billion barrels of oil reserves, with 45 billion in the Kurdish Autonomous Region. OPEC estimates Iran's reserves at 157.5 billion barrels, and Syria has 2.5 billion barrels. Additionally, Azerbaijan has extensive oil reserves for a country of its size, with an estimated 7 billion barrels.

Similarly, when it comes to natural gas, Azerbaijan has proven reserves amounting to 2.6 trillion cubic meters, with additional estimated reserves of around 3 trillion cubic meters.[17] Iran has the world's largest gas reserves, totaling approximately 34 trillion cubic meters. Iraq's proved natural gas reserves total around 3.5 trillion cubic meters, ranking it 12th largest in the world. [18]To put this into perspective, considering the EU's annual natural gas consumption of around 340 billion cubic meters as of 2022, Azerbaijan alone has the capacity to meet the EU's demand for at least 10 years, given its relevant investments and advanced extraction technology already in operation. This suggests that this avenue holds significant promise for facilitating the EU's transition to a sustainable, green economy.

Over the last couple of years. Azerbaijan has supplied increasing amounts of natural gas to the EU (particularly southern and south-eastern Europe) via the Trans-Anatolian Natural Gas Pipeline (TANAP) and the Trans-Adriatic Pipeline (TAP) (Rusi 2022). The Southern Gas Corridor, which is natural gas transportation from the Caspian Sea region via Azerbaijan, Georgia, Türkiye, Greece, Albania, and Italy, became fully operational in late 2020. The EU's strategic diplomatic reengagement with these regions would likely involve reconfiguring its relationship with Türkiye, considering its pivotal geographical position as a potential energy transit route. Linking Iraqi Kurdish gas to the initiatives like the TANAP, which traverses Türkiye, may be an option that presents itself in the medium term (Demir 2019; 2020). 

In response to these developments, Serbia is also planning to diversify its natural gas supplies to reduce its dependence on Russia. Belgrade hopes to purchase Azerbaijani gas via the EU-supported Southern Corridor,[19] as it is the Balkan country most exposed to Russian influence due to a combination of historical, cultural, and political factors. Russia has long maintained strong ties with Serbia, leveraging shared Slavic and Orthodox Christian heritage to foster a sense of pan-Slavic brotherhood,[20] which is reinforced through various means, including economic investments, military support, and political alliances.[21]

Despite its past ties with Russia, Serbia has shifted its focus to becoming a transit country for gas supplies to central Europe. This shift became evident in 2023 when Serbia signed an agreement with Azerbaijan to purchase 400 million cubic meters of gas per year from 2024 to 2026, and then agreed to increase the volume to 1 billion cubic meters per year. [22]  Facilitating this position of Serbia, a gas interconnection between Bulgaria and Serbia is being constructed and financed by the EU. The given deadline to complete the connection is this year, 2024.  That connection further will strengthen Serbia’s position as an energy transit country to central Europe.

Serbian Minister of Energy Dubravka Djedovic Handanovic announced this constriction of the interconnection as follows: “After the completion of the Balkan Stream gas pipeline [an extension of TurkStream transporting Russian natural gas from Türkiye to Bulgaria, Serbia and Hungary], which has provided additional security and opened a new direction of supply, we are now achieving the strategic goal of diversifying suppliers and additionally strengthening our position as a transit country for gas supply to Central European countries”.

The construction of the Niš-Dimitrovgrad-Bulgaria gas interconnector, which began on 14 January 2022 and was completed in December 2023, represents a concrete step toward reducing key Balkan countries' reliance on Russia and increasing their capacity to resist Russian influence as future EU members. This pipeline, extending approximately 170 kilometres, connects the gas transmission networks of Bulgaria and Serbia. With 109 km on the Serbian side and designed for a maximum pressure of 55 bar, the pipeline has a capacity of 1.8 billion cubic meters per year, covering approximately 60 percent of Serbia’s annual gas demand. This project significantly enhances energy security in the region, aligning with the broader EU strategy to diversify energy sources and decrease dependency on Russian gas.[23]

Eastern Mediterranean: Greece as the Key Transition Country

The East Mediterranean region's gas reserves, located in the territorial waters of countries such as Israel, Cyprus, and Egypt, present a significant opportunity. This region, particularly the Leviathan and Tamar fields near Israel, Aphrodite near Cyprus, and Zohr near Egypt, is believed to have substantial natural gas reserves.

Energy Intelligence reports that the Eastern Mediterranean region holds significant gas reserves that could aid in diversifying Europe's gas supply. Israel has identified and tapped into roughly 1 trillion cubic meters (about 35.3 trillion cubic feet) of natural gas. Meanwhile, Cyprus's contingent gas resources are estimated to be between 200 and 400 billion cubic meters. Egypt also possesses considerable gas quantities.

Considering that the EU's gas consumption in 2023 was around 360 billion cubic feet (bcf), harnessing these untapped resources in the Eastern Mediterranean could significantly bolster the EU's efforts to transition to a zero-carbon economy. The potential of these gas reserves, coupled with the region's production capabilities, offers a viable solution for the EU's energy diversification and security needs, playing a crucial role in its sustainable energy transition.

The potential of the East Mediterranean as a gas supplier to the West, including Balkans, hinges on overcoming complex geopolitical, economic, and infrastructural challenges. Pipeline projects, such as the EastMed pipeline, intended to connect these gas fields to Greece and Italy, are under consideration. 

In July 2022, Greece energy minister announced that A long-delayed gas pipeline between Greece and Bulgaria aimed at helping Sofia cut its reliance on Russian gas has been completed and can start commercial operations.[24]

The EastMed Pipeline represents a significant opportunity to enhance energy security in the Balkans. As part of the broader strategy to reduce reliance on Russian energy, this pipeline has the potential to diversify energy sources and contribute to the region's stability and economic development.

Egypt's strategic location, coupled with its well-established liquefied natural gas (LNG) facilities, makes it a major player in the export of East Mediterranean gas. In June 2022, the European Union reached an agreement with Israel and Egypt regarding the supply of liquefied natural gas (LNG) to Europe. The agreement allows Egypt to maintain a significant volume of LNG deliveries to the EU. In 2022, 80 percent of Egypt's LNG exports  were directed towards Europe, where countries sought alternatives to Russian pipeline gas in the wake of Moscow's invasion of Ukraine. During the 2022/2023 heating season, it is estimated that Egypt exported approximately 4.5 billion cubic meters of liquefied natural gas (LNG) to Europe. There has been a possibility for Israel and Cyprus to route their gas exports to Egypt's LNG plants for liquefaction, followed by shipment.

However, the feasibility of increasing the EU’s receipt of LNG from Egypt in the short to medium term is currently under question. According to the Oxford Institute of Energy Studies (OIES), challenges such as tight gas balances and diminished imports from Israel make this prospect challenging to realize. The situation underscores the complexities involved in global energy markets and the intricate balance required to ensure energy security, particularly in the EU's evolving energy needs and geopolitical shifts. Exploiting the energy resources of the Middle East necessitates regional collaboration. Yet, geopolitical tensions, especially those arising from territorial disputes, complicate this endeavor. These challenges need to be navigated carefully to unlock the region's energy potential.

Revitalizing the Middle Eastern energy market has the dual benefit of aiding the EU's efforts to diversify its energy sources and fostering peace in the region. Economic progress and the mutual advantages derived from energy cooperation could help alleviate conflicts. This approach may pave the way for establishing the region as a zone of peace.

Countries in the Middle East are strategically positioned, with many either possessing energy production capabilities or serving as key transit points for energy transport. This unique position underscores the region's potential role as a significant player in the global energy market, offering opportunities for both energy exports and facilitating the transit of energy resources.

LNG Terminals

Expansion of LNG (liquefied natural gas) terminals. Increasing the number of LNG terminals would enable the Balkans to diversify its energy sources, thereby reducing dependence on Russian gas supplies. Establishment of additional LNG terminals would facilitate the import of natural gas from a variety of global suppliers, enhancing the region’s energy resilience. This is particularly important in the context of the EU's ongoing efforts to transition to a zero-carbon economy, where natural gas is expected to play a significant role as a transitional fuel due to its lower emissions compared to coal and oil.

Concluding Remarks

The energy security of the Balkan region is crucial for several compelling reasons. From a European perspective, ensuring this security hinges on the operation and reliability of routes that transport Azerbaijani and Kurdish gas through Türkiye. This strategy is integral to reducing the region’s dependence on Russian energy supplies. Conversely, from a non-European perspective, a failure to diversify energy sources risks the Balkans becoming a vassal region under Russian influence, threatening the region's energy security and the foundational principles of the liberal democratic European Union.

Historically, the Balkans have been a hotspot for significant geopolitical events, such as the assassination that triggered the First World War, highlighting the region's susceptibility to external meddling. Today, reducing Russian influence remains essential for stabilising the area. As the global community transitions towards a carbon-free economy, natural gas, particularly Liquefied Natural Gas (LNG), has become a critical transitional fuel in Europe. The EU's strategic objective drives this shift to reduce reliance on Russian gas through source diversification.

The Balkans serve as a crucial conduit for alternative energy supplies, particularly natural gas, to the southeastern flank of the European Union, including Ukraine. Establishing a diversified energy network that connects Azeri gas and potential contributions from Kurdish and Iraqi sources is vital for diminishing Russian leverage over the region's energy markets.

Reducing dependency on Russian energy and halting Russian leverage are also considered implicit prerequisites for EU membership for Balkan states like Serbia and Bosnia. To achieve this, the region must explore various alternative energy sources, including: The Southern Gas Corridor, Supplies from the Eastern Mediterranean via Greece, and Liquefied Natural Gas (LNG) terminals.

In this context, Türkiye and Greece play a strategic and geopolitical role in the energy security of the Balkans. The construction of the Niš-Dimitrovgrad-Bulgaria gas interconnector, completed in December 2023, exemplifies a concrete step toward reducing key Balkan countries' reliance on Russia and enhancing their capacity to resist Russian influence.