"I welcome this agreement", said Energy Commissioner Andris Piebalgs, "this new link will not only enable the development of electricity trade between the Baltic and the Nordic markets, but it will also strengthen the security of supply of the three Baltic States". This agreement represents the first concrete result from the work of the High Level Group on a Baltic Energy Market Interconnection Plan launched by President Barroso last October.

"The project is included in the European Energy Programme for Recovery (EEPR) and after its adoption by the Council and the European Parliament, it could benefit from the financial assistance earmarked for these energy projects," confirmed Andris Piebalgs.

This message was conveyed today to the summit meeting of the Baltic countries in the Lithuanian capital Vilnius by the European Commission's Director General for Energy and Transport, Mr Matthias Ruete who is also chairing the High Level Group on a Baltic Energy Market Interconnection Plan.

The new interconnection if fully in line with the priorities of the Commission in the framework of the Strategic Energy Review is to connect "energy islands" with the internal market. The effective isolation of the Baltic States, which are still an 'energy island' in the context of regional markets, is considered an urgent problem in terms of security of supply and the correct functioning of the Internal Energy Market. This interconnection will link the Baltic grid to the Nordic grid through a 340 km undersea DC cable and two conversion stations in Lithuania and in Sweden.

President Barroso, following the agreement of the Member States of the Baltic Sea area, had decided in October 2008 to set up a High Level Group chaired by the Commission and composed of high level representatives of the Baltic Sea countries to deal with energy interconnections and market improvements in the Baltic Sea Region. The High Level Group started its works in November 2008. The agreement reached between the three Baltic States today is a very important milestone in this work. The High Level Group aims to deliver a complete proposal for a Baltic Energy Market and Interconnection Plan to the European Council meeting of June 2009.

As a response to the financial crisis and in order to reinforce the EU's energy security, the Commission proposed in January 2009, a European Economic Recovery Plan allocating almost €4bn to support gas and electricity interconnection projects, the next generation of offshore wind technology and Carbon Capture and Storage demonstration projects. The final decision to be reached soon by the Council and the European Parliament on this proposal of the Commission should allocate €2365m for key strategic interconnections (gas and electricity), out of which, €175m are earmarked to support the Baltic-Swedish interconnection. The regulation states that substantial capital expenditure must be incurred by the end of 2010, so the project implementation should begin without delay. In this context, project promoters will have to submit a detailed proposal to the European Commission this summer.