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Doubts over Finnish-Estonian gas pipeline project

Energy experts interviewed by Yle say plans by the gas company Gasum to construct a pipeline from Estonia to Finland will not guarantee the supply of cheap natural gas.

Gasum-yhtiön kyltti.
Image: YLE

In April, Gasum unveiled a project to import liquefied natural gas (LNG) paid for in part by EU funds. Financial support for a liquefied natural gas import terminal will also be requested from the EU. The project also includes an import terminal to be built on the Finnish coast.

Energy experts interviewed by Yle point out that the project, valued at a half a billion euros, does not guarantee the supply of cheap natural gas.

Since the 1970s, imports of natural gas from Russia have been via a direct pipeline. As an alternative, Gasum plans a terminal either at Inkoo or Porvoo through which LNG could flow.

Finland hopes the EU will provide as much as half of the almost 400 million euros needed for the terminal. The gas networks of Estonia and Finland would be joined together by means of a pipeline costing some 100 million euros.  

The Energy Division of the Ministry of Economic Affairs believes tanker imports of natural gas would be preferable.

”Lower prices prevail in those areas where the LNG alternative is used and where the network is open to competition,” says Esa Härmälä, the Ministry’s Energy Division Director.

No guarantee for low price gas

Energy experts interviewed by Yle emphasize that construction of a terminal does not necessarily create competition that would significantly lead to drop in prices.

”World market development of liquefied natural gas is very unstable. It has been cheaper for a few years but this trend may not continue,” says Pami Aalto, Jean Monnet Professor from the University of Tampere.

EU view expected next spring

EU reaction to the project should become clear by next spring. Gasum says that if all goes according to plan, the pipeline would be ready by 2017 at the earliest.

Finland plans to work together with Estonia in pushing ahead with the pipeline project. A location for the gas terminal could just as well be in Estonia. Gasum says no talks have yet been held with Estonia on a location there.  

International gas link

Gasum announced its plans in April. At the time, the company noted the proposed LNG import terminal would connect Finland with the international gas market. Gasum says a total of 15% of the gas used by EU countries is already imported in the liquefied form.

Gasum imports natural gas to Finland and distributes and supplies it to energy users across the country.

The company is co-owned by the Finnish state, the energy company Fortum, the German-based utility E.ON and the Russian energy giant Gazprom.

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