After more than a year of the countries’ competing to secure funding for the project, the Estonian Economy Minister Juhan Parts made an overture for compromise in January this year. If the project is carried out, it is expected to end both Finnish and Estonian dependence on Russian gas entirely.
Analysts say the region's gas demand only warrants one LNG import terminal, at a cost of around 500 million euros. A pipeline that would allow Finland and Estonia to share imports would cost another 100 million euros.
"The intent of the signed Memorandum of Understanding is for cooperation between the Estonian and Finnish LNG terminal developers to build liquefied natural gas terminals on both sides of the Gulf of Finland," the Estonian economy ministry said in a statement.
The ministry added that by the end of May the project developers, Finland's Gasum and Estonia's Paldiski terminal developer must present the joint project's technical and economic details to their respective countries' regulators and the European Commission.
The European Union could fund up to 40 percent of the terminal, provided it serves the interests of more than one country. Finland and the three Baltic states of Estonia, Latvia and Lithuania consume about 10 billion cubic metres of gas per year, all currently supplied by Russia's Gazprom.