Estonia and Finland Reach Agreement on LNG Terminal
Ending the spat over location of a liquefied natural gas terminal (LNGT), officials in Finland and Estonia have OK'd a USD$690.6 million plan to build two separate LNG terminals - one in Finland and the other in Estonia.
The two countries also signed a letter of intent concerning construction of the Balticconnector, a USD$130 million natural gas pipeline that will connect the two states.
The decision was announced last Friday and came amidst concerns that the Baltic nations of Estonia, Latvia, Lithuania and Finland do not have direct access to the European Union’s LNG market.
“As a result, we have all been witnessing the steep rise of natural gas prices in the recent years,” Juhan Parts, Estonia’s Economic Affairs minister said, adding, “This (situation) must change.”
In accordance to the agreement, the technical specifications and peculiarities as well as the economic plan of the strategic project must be submitted to the European Commission by the end of May.
Meeting the deadline will secure the countries’ participation in the Connecting Europe Facility, an EU project aimed at creating trans-European networks for energy, telecommunications and transport, in which up to 50 percent of the project costs are expected to come from the EU structural funds.
According to the agreement, the Estonian and Finnish LNGT developers will cooperate while constructing the terminals on both coasts of the Gulf of Finland.
Praising the deal, the Estonian minister said that the agreement is the result of long negotiations and necessary for both partner states.
According to the original plans, there was supposed to be one large regional terminal, but Estonia and Finland could not agree on its location.
To satisfy the row, the European Commission hired Booz&Company, a consulting firm, to assess what location is the best for construction of the Baltic region’s LNG terminal after the Baltic States were not able to decide themselves.
Meanwhile, Lithuania had earlier secured EU support in building its LNG terminal. The christening of the floating vessel took place a couple weeks ago in South Korea.
Notably, Latvia has also not given up intention to pursue building of its own liquefied natural gas terminal.
Responding to the Natural Gas Europe query on the Latvian pursuit, Evita Urpena, spokeswoman of the Ministry of Economy, emphasized that the November 2012 Booz&Company study indicated all the countries - Estonia, Finland and Latvia - are potentially suitable as a LNGT location.
“Latvian terminal was equally evaluated as a good option, but it had several lower indicators...The study also evaluated several LNG terminal options in Latvia’s Ventspils and Riga. Those projects are currently at the different stages of development...The ministry is positive about LNG terminal in Latvia,” Urpena said.
Finland and the three ex-Soviet Baltic states of Estonia, Latvia and Lithuania consume about 10 billion cubic meters of gas annually, all of which is currently supplied by Russia’s gas giant Gazprom.