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bne March 2025 Companies & Markets I 5
Ukraine already did this back in 2022, and now the Baltic states have finally freed themselves from this dependence. Moscow can no longer use energy as a weapon against them. This also means Europe is now even more united, Zelenskiy added. "More cooperation is needed with America – LNG gas, oil. More efforts are needed with partners in regions neighbouring the EU to import the necessary energy – the Caucasus, the Middle East, North Africa. The less Europe depends on Russia, the sooner we can guarantee real security for everyone."
The Baltic States have wanted to cut ties with the BRELL network since the invasion of Ukraine three years ago but have remained dependent on the grid to power their growing economies.
An important change in the grid was the launch of the controversial Belarusian Ostrovets (aka Astravets in Lithuanian) nuclear power plant (NPP) in 2020, built and financed by Russia, that produces significantly more power than Belarus needs, which Minsk hoped would become a cash generator from exports to the Baltic states.
While the Baltics were already talking about cutting ties to BRELL at the time, a cold winter in 2021 saw the three tiny republics import record amounts of power from Belarus that winter to cover their own shortfall in energy supplies. However, since then and following heavy investment into renewable sources, in the last few years the import of power from Belarus and Russia has fallen away to next to zero. Despite this, Belarus President Alexander Lukashenko recently floated plans to build a second NPP in Belarus, with an eye on boosting exports to the Russian market.
Kaliningrad stranded
The Russian authorities have been preparing for this for years, but despite heavy investment into new generating capacity, gas storage facilities and buying a LNG tanker
dedicated to the region, the exclave remains heavily dependent on gas supplies that transit Lithuania, making it vulnerable to sanctions.
“Kaliningrad is now an energy island, meaning it must generate all its electricity independently,” Tomas Janeliūnas, the former Prime Minister of Lithuania, said in a post on social media. “There are no connections with Poland. And Lithuania? It’s no longer supplying or transferring power.”
Lithuania continues to transit natural gas to Kaliningrad, creating what Janeliūnas describes as a major “leverage point” over Russia. In 2023, Lithuania transited 2.3bn cubic metres (bcm) of gas to the exclave – equivalent to its entire annual consumption. “Kaliningrad still depends entirely on Lithuania's gas transit in day-to-day power plant operations,” he said.
Amongst the measures Russia took to improve Kaliningrad’s energy security were to double its gas-fired power capacity, constructing an €780mn gas storage facility with a capacity of approximately 800mn cubic metres, and acquiring the Marshal Vasilevsky tanker, a $300mn LNG terminal ship.
The LNG terminal could supply Kaliningrad’s full gas demand of up to 3.7 bcm per year, according to reports, but Janeliūnas points out that LNG is about four and half-times more expensive than the piped gas the enclave currently receives via Lithuania.
“If something happened to that pipeline in Lithuania... say, an accidental ‘anchor drop’ or a truck crash... Kaliningrad’s gas supply would be, let’s say – challenged,” says Janeliūnas.
“The Baltic synchronisation didn’t just cut off Russia’s grid,” Janeliūnas concluded. “It put Kaliningrad in a tight spot – where Lithuania may hold a key piece of the puzzle.”
Central and Eastern European banks defy
expectations with robust 2024 earnings, says RBI
bne IntelliNews
Banks across Central and Eastern Europe (CEE) and Southeastern Europe (SEE) defied expectations and reported impressive returns on equity (RoE), ranging between 15% and 20% in 2024, Raiffeisen Bank International (RBI) said in its most recent annual banking report on the region.
The bank’s surpassed earlier forecasts that anticipated a decline post-2023. This performance notably outstripped that of Euro Area banks by 5 to 10 percentage points, reinforcing the region's
reputation as a resilient pillar within European banking.
The relative weight of the CE/SEE banking sectors has increased to 5% euro area banking assets now – doubling its share since 2007.
“From this perspective, we can again speak about the CE/SEE region as a corner of resilience in European banking, while still offering catching-up potential in certain markets and market segments,” says RBI.
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