Speech of Vytautas Nauduzas, Vice-Minister of Economy, Republic of Lithuania

Mr.Speaker, Mr.Deputy Prime Minister, dear organizers, dear ladies and gentlemen! Once a doctor, an architect, a politician discussed over the oldest profession in the world. A doctor said: “It’s clear - it’s my profession. Because if a woman was created from the bone of Adam...” “No. no”, - opposed the architect. It’s my profession. Because before this medical operation, it was a chaos and the world was created due to design of architect.” Just politician was quiet and silent. They wondered his opinion. And he replied: “My dear friends, to your mind who created this chaos?”

Dear ladies and gentlemen, who created this energy chaos we face today? Is it unavoidable for citizens of Ukraine or any other country to pay more and more for energy supply? Is it determined that the people of Ukraine and the EU will have just the increase of energy prices? Do not think so, not only because the decline of energy resource prices today despite the forecast of Gasprom of doubling or tripling of the gas prices till the end of this year; do not think so because energy monopolies propose different tariffs to countries dependent on their foreign policy. As I saw in one Ukrainian newspaper the caricature: price of $400 per 1000 cubic meters of gas if you will not stop to criticize Russia on events in Caucasus; $ 300 per 1000 cubic meters, - if you recognize Southern Ossetia and Abkhazia; and $250 - if you will express negatively and publicly that Ukraine is not joining NATO.

Recently one Lithuanian official was asked by a journalist “Do you dream about improvement of relationships with Russia?” “Yes, I do. Yes, I dream”. “How much it could cost?” – “Nothing”. “But how it could be nothing?” – “To dream always costs nothing”. However beautiful the dreams, you should occasionally look at the reality. And what is reality? – The reality is very rich political, cultural, historic, economic relationship of cooperation with Russia. Sincerely speaking, it is always much better to have rich and happy neighbor than to have poor, angry, unreliable and hostile enemy. Anyway, it is clear that in a long distance the gap of demand and supply of energy resources will increase globally, in the EU, in regions and in countries. Consequently, the prices on energy resources should increase as well. Additionally, taking into account financial crisis, climate change, coming food crisis, we are getting very dark picture. Are we able to avoid such situation? The best reply was done by Winston Churchill, former Prime Minister of Great Britain: “Optimist is everyone who in difficulties is finding excellent opportunities.” Is energy independence of Ukraine or the EU a good opportunity? To my mind, it’s nothing else, but just nice illusion. No country, including Russia, is energy independent. Russia, for example, needs to get technology and equipment for oil and gas sector. Energy suppliers and energy consumers are highly interrelated, like couples, like wives and husbands, and if we have a hole in the ship we are sinking together.

To increase energy security, - is this a real plus, a real opportunity, - due to innovation, due to research, in energy sector? Yes. Sweden, for example, will stop crude oil import in 2020. Again - due to innovation, due to research. Germany in 2020 will satisfy its needs on 27% and this is just the beginning. Is this creativity? Yes. But not so called creativity, when politicians try to get more and more energy resources from Middle East, from Russia or Iran. The best scenario for improving energy security is Common EU energy policy. The EU should speak with single voice. Common EU energy policy is not a front line, is not against Russia or other countries. If energy suppliers are united in OPEC, why the EU is unable to buy gas collectively? Today the EU Common energy policy is still weak. For very simple reason, - because the EU is still weak in the energy sector. We could strengthen energy security due to transatlantic cooperation. Especially taking into account newly elected President Mr. Obama, already sometimes called as Mr. Globama, because of his willingness for whole world. But anyway, there are a lot of skeptics on efficiency of transatlantic cooperation on energy matters. Another joke - recently it was discussed among Mr.Barroso and Secretary General of NATO Mr. Scheffer - how soon NATO and the EU will get its former power? The dispute was so harsh that they decided to invite God. So, Mr.Scheffer asked “To your mind, when we will regain our power, our influence in the world?” God thought a little bit and answered “Yes, NATO will regain its power. But not during your life-time.” The same question was put by Mr. Barroso. God replied “Yes, the EU will regain its influence, its power, but not in my life-time”.

Anyway, it’s clear that NATO and the EU are most powerful institutions in the whole world. And jokes that Russia became already informal EU leader of energy matters are groundless. In order to increase the level of energy security, Common EU energy policy is developing on following directions. Diversification of supply, - previous speakers spoke about it a lot.

Efficiency of energy consumption, especially among newcomers; alternative energy, renewable energy and solidarity principle of all the EU countries started to be implemented quite dynamically. And it could be confirmed in a case of Lithuania. As you probably know, before Big Bang, before the acceptance of 10 newcomers to EU, European Commission challenged 3 major problems. Two of them were directly directed to Lithuania. Firstly, it was closure of Ignolina Nuclear Plant; secondly, it was Kaliningrad transit; and thirdly, it was Cyprus problem. Why closure of Ignolina was such a great problem? Before that it was closure of Barsabak nuclear plant in Sweden, few enterprises in Germany, the same decision was made for Bulgaria, Slovakia. The simple answer: because Ignolina Nuclear Plant looks much larger comparing with all these nuclear plants. Let me say briefly what we intend to do till 2020. Firstly, Lithuania is under preparatory process to build up regional nuclear plant with co-owners of Poland, Lithuania, Latvia and Estonia. The capacity will be 3400 mega Watt and we expect to introduce that in 2016-2017. Secondly, Polish-Lithuanian power-bridge (the capacity 1000 mega Watt) should be introduced in 2012-2013. Thirdly, power-bridge, Sweden-Lithuania with capacity again 10 00 mega Watt and the exploitation should be ready by 2016-2017. Of course, we have great intentions to have power-bridge Ukraine-Belarus-Lithuania, and we will start our negotiations. It should be mentioned as well, power bridge Finland-Estonia (3050 mega Watts) which started to work in 2006, and it will be tripled probably till 2012. We have several other projects like LAG terminal, gas underground storage and so on. AS you can understand these projects are very costly, are very expensive and we will be completely unable to realize that without EU support from structural funds. The last but not the least project is renovation of multifamily buildings and the cost will be more than $16 billion. And of course again we would be unable to realize such kind of projects without EU support. Lithuania is paying great attention to efficiency, to savings of energy and we expect that in 2020 20% of our energy needs will be satisfied due to renewable. And finally, I feel myself in Kyiv like at home. We have a lot of commonalities, a lot of common things. E.g. the most popular sport in Ukraine and in Lithuania is - telephone calls. Let’s communicate more and more. It gives us opportunity to get synergism, cooperation on energy matters. Better future is knocking on our doors. Be ready to everything and everything will come.

Diakuyu!

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