The New Energy Community: Energy Integration and the Liberalisation of the Energy Market in South East Europe

The New Energy Community: Energy Integration and the Liberalisation of the Energy Market in South East Europe

By Milos Vuckovic and Patrick Callinan

Badly damaged energy infrastructure from the Yugoslav conflicts of the 1990s was one factor that contributed to the breakdown of a once integrated energy system stretching from the Adriatic to the Aegean seas. Much of the South East European (SEE) energy infrastructure has long been due for closure and replacement. Wars and economic instability in the 1990s, however, severely delayed that progress.

The latest stage of the European Union (EU) expansion to the south east Balkans, coupled with the ever increasing need to find an alternative to the Russian Federation source for energy supplies to Western Europe and beyond, highlight the increasing need to improve regional cooperation amongst SEE states. Such cooperation offers significant advantages, both in terms of the improved utilisation of existing energy supplies and production capacities, as well as optimising future investments.

Turkey's potential as a major energy transit country, as well its geographical proximity to SEE, means that through increased cooperation the EU could potentially reach energy sources of the Caspian basin, central Asia, the Middle East, and North African countries. Being a NATO member and having a secure system with democracy, Turkey can provide stability and security to the Balkans and, therefore, security to energy supplies of the region. Accordingly, such aspirations benefit both the EU and the SEE countries.

As a response to these factors, the Energy Community of South East Europe ("the Energy Community") was established between the EU and a number of SEE countries to extend the EU internal energy market to the SEE region and beyond. [footnote omitted]

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Milos Vuckovic is a senior partner with Karanovic & Nikolic, a leading commercial law firm with a regional focus on business in Serbia, Montenegro, Macedonia, and Bosnia. He is a corporate lawyer and head of the firm's Energy team, and serves leading European energy companies and investors exploring the region's markets today.

Patrick Callinan is a senior associate with Karanovic & Nikolic and is admitted to practice in England and Wales. He focuses on corporate and regulatory issues, and is also a member of the firm's Energy team.