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US promises up to $1bn in energy infrastructure financing for Three Seas Initiative

Poland is moving forward with the expansion of its LNG terminal in Swinoujscie.
Poland is moving forward with the expansion of its LNG terminal in Swinoujscie.

The US pledged to commit up to $1bn in financing for infrastructure projects across the countries of the Three Seas Initiative, an economic and political cooperation project of the 12 European Union member states of Central and Eastern Europe, US State Secretary Mike Pompeo told the Munich Security Conference on February 16.

The financing will go primarily to strengthen energy security across the initiative’s countries, which consider it necessary to end, or at least reduce, dependence on Russia as an energy supplier.

A number of CEE countries source most of their oil and gas from Russia. Depending on Moscow for supplies of strategic energy resources has taken on extra political weight after Russia’s takeover of the Crimea from Ukraine in 2014.

Poland and the Baltic states are the regional hawks advocating faster cutting of energy ties to Russia. However, countries like Hungary and Bulgaria are seen as friendlier to Russia.

For its part, the US is eyeing the traditionally friendly CEE region as a market on which American gas could replace Russian gas. Thanks to the shale gas boom, the US has an abundance of gas, which it seeks to export – if the CEE builds region-wide reception, transmission, and storage infrastructure.

Some of the infrastructure is underway already. Poland is moving forward with the expansion of its LNG terminal in Swinoujscie. Croatia is building an LNG terminal on the island of Krk.

“As a brand new statement today of our support for sovereignty, prosperity, and energy independence of our European friends, today I want to announce that through the International Development Finance Corporation, and with the support of our United States Congress, we intend to provide up to $1bn in financing to Central and Eastern European countries of the Three Seas Initiative,” Pompeo said in Munich.

“Our aim is quite simple: it is to galvanise private sector investment in the energy sector to protect freedom and democracy around the world,” he added.

Some of the potential recipients of the financing have responded positively already.

Estonian President Kersti Kaljulaid said the US’s funding commitment demonstrated Washington's strong belief in the economy of the region, ERR reported.

Estonia is holding a Three Seas Initiative summit in Tallinn in June.

Pompeo’s pledge, if carried out effectively, will go on top of EU-financed projects that are part of the Projects of Common Interest (PCI), key cross border infrastructure projects that link the energy systems of EU member states. The latest PCI list contains 151 projects with €5.35bn in financing available from the EU’s Connecting Europe Facility programme.