Thursday, June 20, 2024
HomeLNGEstonia and Finland agree to jointly lease a floating terminal for LNG

Estonia and Finland agree to jointly lease a floating terminal for LNG

The Estonian Minister of Economic Affairs and Infrastructure Taavi Aas and his Finnish counterpart Mika Lintilä have agreed to the joint leasing of a floating terminal for liquid natural gas (LNG) that will guarantee the supply of gas to both countries.

“The supply of natural gas to both Estonia and Finland is highly reliant on Russia and given the uncertain times we are facing, that means we have to cover our backs and make preparations to do without Russian gas altogether,” explained Minister Aas.

Since the Baltic States and Finland as a region are strongly tied to Russian gas supplies, almost half a year’s consumption would not be covered if the supply lines were cut. Finland consumes around 23 terawatt-hours (TWh) and Estonia around 5 TWh of gas a year.

“We and our neighbours across the gulf felt it made sense to join forces and shore up the supply of gas to both our countries by taking into use a shared LNG terminal, which we intend to do later this year,” Mr Aas continued.

Minister Lintilä added that we must be prepared for disruptions in gas imports as a result of the war in Ukraine.

“A floating LNG terminal is an effective way of ensuring gas supplies, including for industry,” he remarked. “My thanks go out to the Estonian government for their smooth cooperation on this issue.”

The plan foresees Estonia and Finland establishing the hauling quays needed to service a floating LNG terminal before jointly leasing such a terminal, which can be used by both countries on the northern and southern shores of the Gulf of Finland. The quays will be established in Paldiski in Estonia and in Inkoo in Finland. The floating terminal is planned to be in place by autumn, at first alongside whichever hauling quay it can be installed soonest. The location of the terminal thereafter will depend on market need and size. The hauling quays on both sides of the Gulf of Finland will boost the security of supply for consumers of gas in both countries and ensure the flexibility required for the use of the floating terminal. Both countries will bear the expense of establishing the quays, while the cost of renting the floating terminal will be shared according to how much gas each country uses. 

The Estonian and Finnish gas system administrators Elering and Gasgrid are working together to implement the plan.

“In the recent months we have been cooperating with different market participants and parties in the region in order to find the best solution for reducing the risks related to the gas flows from Russia,” commented Elering AS’s CEO Taavi Veskimägi. “This project is of course very urgent due to the geopolitical situation and the necessary infrastructure has to be built within an exceptionally fast schedule. The Estonian-Finnish gas interconnection Balticconnector is what enables us to create the best and economically sufficient solution. Balticconnector ensures the security of supply in both countries and the necessary flexibility to operate the floating terminal according to the different scenarios.”

“Ensuring the security of supply in these and other potential unpredictable and unforeseen situations is crucial,” added Gasgrid Finland’s CEO, Olli Sipilä. “The fastest solution to ensure Finland’s security of supply and the continuity of gas transmission to households and industry in all different scenarios is an LNG floating terminal.” 

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