Transatlantic Energy Security From a Baltic Perspective

By Justina Budginaite-Froehly - Achievements and challenges of energy security in the region.

Nov 13, 2024

(FSRU Independence; Source: Höegh Evi, former Höegh LNG)

Years before Russia started its full-scale war against Ukraine, the Baltic states of Lithuania, Latvia, and Estonia, correctly assessing the Russian threat, implemented far-reaching reforms to end their energy dependence on Russia. Successful implementation of multiple infrastructural projects and energy market liberalization significantly improved Baltic energy security. It made the region a role model for the rest of Europe. Further energy security upgrades are planned in the coming months when the Baltic states will desynchronize their electricity grids from the Russia-controlled IPS/UPS electricity system in February 2025. While celebrating these noteworthy achievements, the Baltic states and their NATO allies should be aware of the potential increase in Russian gray zone activities that could be directed against further consolidation of the European energy security stronghold in the Baltics.

Baltic Energy Security Upgrades

In terms of energy security, the Baltic states were an isolated energy island until 2014. Having no access to European electricity and gas networks and being heavily dependent on energy imports from Russia, they were exposed to Russia’s political blackmailing and interference in domestic politics. The game-changer was Lithuania’s decision to install an LNG terminal on its Baltic coast. Despite active pressure from Russia, Lithuania successfully implemented the project and at the same time carried out far-reaching reforms to liberalize its gas market, forcing Russia’s Gazprom out of the Lithuanian energy sector. Similar, albeit less principled, measures were also taken in Latvia and Estonia.

While being quite an unusual project at a time when most of the European countries were still comfortable with fostering and even deepening their energy “partnerships” with Russia (Germany’s decision to install the Nord Stream 2 pipeline serves as the best example), the Lithuanian LNG terminal brought the full spectrum of positive effects from short-term gas price reductions to the long-term ability to serve regional and broader European energy security interests.

Lithuania, followed by Latvia and Estonia, became the first European country to ban all Russian gas imports, including its LNG, in April 2022 as a reaction to the invasion of Ukraine.

The Baltic states’ geo-economic shift in terms of energy supplies was remarkable. Having covered all its natural gas needs with imports from Russia back in 2013, Lithuania, followed by Latvia and Estonia, became the first European country to ban all Russian gas imports, including its LNG, in April 2022 as a reaction to the invasion of Ukraine. Other European countries, despite Russia’s brutal war against Ukraine, remain eager consumers of Russian gas and have even increased the import volumes of Russian LNG by 11% year over year in the first half of 2024.

The fully operational LNG infrastructure in the Lithuanian seaport Klaipėda and well-established partnerships with LNG suppliers, mostly from the US and Norway, enabled Lithuania’s, and the wider Baltic region’s, principled energy policy and their smooth transition from Russia to other gas suppliers. Having become one of the first European importers of US LNG in 2017, Lithuania’s LNG imports from the US peaked in 2022, making the US the leading LNG supplier for Lithuania and setting a clear sign that increased transatlantic cooperation was the right answer to Russia’s aggression and destabilization attempts. In the first six months of 2024, Lithuania’s LNG imports were almost equally split between the US and Norway as the two main suppliers.

In addition to the Lithuanian LNG terminal that symbolically holds the name “Independence,” further infrastructural upgrades in the Baltics followed, strengthening the region’s leading role in European energy security efforts even further.

The recent completion of the Enhancement of Latvia-Lithuania interconnection project (ELLI) provided Lithuania with better access to the Inčukalns underground gas storage (UGS) in Latvia, which is unique in the region, serving the function of a crucial gas backup facility. The Baltic countries fill the storage in summer when gas prices are low to avoid gas shortages in winter when both gas consumption and its prices increase significantly. At the same time, the bidirectional ELLI pipeline allows increasing gas flows from the Lithuanian LNG terminal to Latvia and Estonia.

The importance of the Gas Interconnection Poland–Lithuania (GIPL), which has been operational since May 2022, cannot be overstated. The bidirectional pipeline serves as the key element of the European North-South gas corridor connecting the Baltic region and Finland with Continental Europe. It further diversifies the Baltic countries’ gas import routes and opens new possibilities for exploiting Lithuania’s LNG terminal as an entry point for LNG to the European gas market.

A recent agreement between Slovakia and Poland to bring LNG originating from the US through the Klaipėda LNG terminal, where Poland’s oil and gas company Orlen has secured long-term capacity, and further onwards through GIPL and the Vyrava interconnector between Poland and Slovakia from January 2025, marks the changing geo-economic realities in the region. Instead of using the traditional East-West interconnection originating in Russia and going through Ukraine, Slovakia will be supplied with natural gas from the North for the first time by using this new route. This is a crucial step forward for the country as its traditional gas supply route originating in Russia and passing Ukraine in transit counts its last days as the gas transit contract between Russia and Ukraine comes to an end on January 1, 2025.

Beyond dismantling dependencies on Russian gas, the Baltic states are about to get rid of remaining links with Russia in the electricity sector, too.

Currently, the Baltic countries are connected to Russia on the power system level, but in February 2025, they will disconnect their grids from the so-called BRELL electricity ring, which has provided unified terms for grid operation in Lithuania, Latvia, Estonia, Belarus, and Russia within the Russia-controlled centralized dispatch of Integrated Power System/Unified Power System (IPS/UPS).

After a decade-long preparation, the Baltic states will finally synchronize their electricity grids with the Continental European Network (CEN). To achieve this goal, multiple power interconnectors with Finland (Estlink 1 and 2), Sweden (NordBalt), and Poland (LitPol Link) have been installed on- and offshore, allowing the Baltic states to halt electricity trade with Russia and Belarus.

All of these changes in the Baltic energy landscape have significantly increased regional and European energy security. But exactly because of their central role in consolidating the North-South energy corridor that will contribute to eliminating Russia’s role as an energy supplier to Europe, the new infrastructural installations — Klaipeda LNG terminal, gas pipelines, and power cables — risk becoming a target of Russian gray zone activities. Russia and its allies China and Belarus already have a long list of hybrid involvement in the Baltic states and Poland that ranges from damaging Balticconnector, an underwater gas pipeline connecting Finland and Estonia, to orchestrating a migrant crisis in the border region between Belarus, Poland, Latvia, and Lithuania, among multiple other hostile actions.

Kaliningrad as a Security Factor for the Baltics

In light of current energy security upgrades in the Baltic states, Russia can be expected to try to exploit any opportunity to harm their progress in advancing the consolidation of the North-South energy corridor. The fact that the last ties of the Baltic states to Russia are cut might provide additional motivation for Russia to increase its hybrid activities in the region. The Kaliningrad exclave, with its geography and high militarization level constituting a permanent security threat to the Baltic states, might become an important focal point in this respect.

With the Baltic states’ energy supply routes switching from the East-West to North-South, the Kaliningrad exclave is becoming an isolated energy island. Situated on the Baltic coast between Lithuania and Poland and separated from mainland Russia by the territories of Lithuania and Belarus, Kaliningrad is traditionally supplied with energy through the Lithuanian territory. It is also (still) an integral part of the BRELL electricity ring via the Baltic states’ grids, but with Lithuania, Latvia, and Estonia leaving the BRELL agreement in February 2025, Kaliningrad will be left to operate in an isolated regime. In preparation for desynchronization by the Baltic states, isolated operation tests have been carried out annually in the Kaliningrad power grid since 2019.

Even though the official Russian position states that the exclave is ready for the upcoming changes, the fact that the power system stability in Russia and Kaliningrad will not be tied to the situation in the Baltics anymore might encourage Russia to increase its pressure on the Baltics through provocations and sabotage. One of the most likely Russian hostile measures is expected to be oriented toward testing the Baltic states’ and NATO’s resilience to increased levels of propaganda, accentuating the need to defend the economic and security interests of Kaliningrad amid the shifting geo-economic realities in the region. Similar claims concerning the enforcement of EU sanctions on the supply of certain goods to Kaliningrad via Lithuania by rail have already caused unrest in the EU.

Increased attempts to sabotage Baltic energy infrastructure can be expected a year later when Lithuania’s long-term gas transit contract with Gazprom will run out in December 2025. After losing its stable pipeline gas supply through the Lithuanian territory, Kaliningrad will be exclusively supplied by Russian LNG through the Kaliningrad LNG terminal and supported by an underground gas storage facility. This will increase the presence of Russian LNG vessels in the Baltic Sea, leading to the growing risk of targeted damage to the Baltic states’ offshore energy infrastructure. Given the exclave’s proximity to the NATO members Lithuania and Poland, other security risks, such as increased spying attempts as witnessed in the case of the Russian shadow oil fleet off the coast of Gotland, should also be taken into consideration.

Conclusion

Two main conclusions can be drawn from the Baltic success story in transforming the region into a European energy security stronghold. First, the transatlantic partnership in the energy domain is crucial for Europe in changing its gas trade patterns. With stable imports of US LNG, the North-South energy corridor has emerged as a strategically important solution for energy security issues in Central and Eastern Europe, including Ukraine. It is, therefore, fatally wrong to halt new gas export permits for US LNG exporting companies in such a crucial stage of geo-economic re-orientation in Europe. Second, energy security strategies are only semi-mature if they are not backed with appropriate measures of energy infrastructure protection. Although NATO is moving in the right direction strengthening its role in this area, there is still much room left for Russia’s malign strategies, especially in the contested Baltic Sea, where Russia’s concerns over the energy security of Kaliningrad might soon emerge as a new justification for its increased presence along the Baltic shores.

It is clear that for the Baltic energy security stronghold to withhold the pressures from Russia and expand toward consolidating the North-South energy corridor in Europe, the transatlantic commitment to shared political, economic, and security goals must adapt to a new security environment while pro-actively pursuing its strategically important geo-economic agenda.