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Energy crisis could slow Finnish industry

Finland's chemical and forestry sectors warn of possible factory shutdowns as natural gas prices skyrocket.

Finnish forestry firm Stora Enso replaced Russian natural gas with liquefied natural gas at its Imatra facility. Image: Kalle Purhonen / Yle

Finnish export manufacturers say they may be forced to scale down production if natural gas prices continue to rise.

European gas prices recently surged after Russia deepened supply cuts. Natural gas prices are five times higher than a year ago and could still rise.

Finland's industrial sector does not rely as heavily on natural gas as many other European countries, but it's still nearly impossible for Finnish manufacturers to completely phase out the use of natural gas. Although it represents only around five percent of total energy consumption in Finland, gas is an important part of the energy mix.

Winter energy shock

The country's forestry and chemical sectors have expressed concern regarding the coming winter, when they say they may be forced to temporarily shut down some factories.

"It's possible that production at some facilities will decrease or halt if the gas price reaches impossibly high levels or if supply issues arise," said Ahti Fagerblom, who heads energy and climate policy at the Finnish Forest Industries.

In May Russia cut gas to Finland, which refused to pay in roubles and angered Moscow by asking to join Nato.

"It's especially difficult for small companies to replace natural gas," said Mika Aalto of the Chemical Industry Federation of Finland, explaining that investments into other energy sources take time while natural gas also serves as raw material.

Around one fifth of companies in the Finnish chemical sector rely on natural gas as an energy source or raw material. Among forestry companies some five percent use gas to fuel factories. Fagerblom said forestry companies are primarily switching to fuel oil to replace natural gas.

Despite the continent's natural gas crisis, Finland says it should have enough natural gas to cover industrial export needs. But this hinges on access to a liquefied natural gas (LNG) terminal vessel from which gas can flow to Finland and Estonia via the Balticconnector natural gas pipeline. Gas cargoes will help cover Finland's gas needs in the event of any shortfalls.

A number of European ports are also increasingly building LNG terminals, or expanding existing capacity, to reduce reliance on Russian-sourced gas.

In the event of a gas shortage, Finland would prioritise households and essential social services, such as healthcare.

Earlier this week EU energy ministers agreed to a plan for member states to voluntarily reduce their use of natural gas consumption by 15 percent from the beginning of August until the end of March.