Finland, Estonia Reach Understanding on LNG Terminal Locations
Finland and Estonia have agreed to build the Balticonnector gas pipeline connecting two new LNG terminals, one in each country.
"I am very satisfied that we have reached agreement. With the implementation of the planned measures, Finland will become integrated into the European gas network and be able to improve the country's gas-based energy security," Prime Minister Alexander Stubb commented on Monday.
The terminal in Estonia would be smaller than the one in Finland, which is meant to provide LNG to users in the region. The small-scale LNG terminal in Estonia is mainly designed to increase security of supply. The Balticonnector pipeline would then connect the two terminals.
‘According to the plan, the development of gas infrastructure in the Baltic region would enable Finland and the Baltic states to access the underground gas storage in Latvia, too.’
The parts did not convene on the timing of the construction, simply agreeing to implement the LNG project as soon as it will be technically and economically viable.
‘The aim is to have the Balticconnector pipeline up and running in 2019. The terminal may also be built in Estonia in case that its implementation has not proceeded sufficiently by the end of 2016.’
Some commentators pointed their finger at the project, defining it too expensive.
“The projects are a large investment and we need all of its components. The whole undertaking must also be economically feasible as, ultimately, the investment costs will be transferred to the price paid by the end users," Minister of Economic Affairs Jan Vapaavuori replied.
GASUM: WE NEED SUPPORT
Gasum continues design activities for the Balticconector, which is a joint project with Võrguteenus.
‘The prerequisites for the implementation of the Balticconnector pipeline project are the realization of the LNG terminal project and progress made in the major gas infrastructure projects in the Baltics. Gasum and Võrguteenus have applied for EU support for the project design phase. According to current information, the final support decision will be made in the spring,’ reads a separate note.
The company added that the schedule, final location and investment scale of the project depend on the development of the market in the area.
”Gasum will continue its work to achieve progress in the projects. To be realized, the projects will have to be commercially viable. This will require the development of the gas market in the Baltic Sea region and sufficient financial support for the projects,” Gasum CEO Johanna Lamminen stated.
The State of Finland is to become the majority shareholder of Gasum, after clinching deals to purchase 31% of the company's shares from Fortum and 20% from E.ON.
Earlier this year, Gasum and Axela Energy said they did not agree on any possible LNG terminal compliant with the indications stated by the European Commission.