New energy projects in Estonia

22.12.2014 Kinga Redłowska

The Estonian energy company Baltic Energy Partners has started to import gas from Lithuania. It seems to be a symbolic event – Estonia is depended on gas imported from Russia and so far hasn’t bought it from other Baltic states.

Baltic Energy Partners is a company that trades gas and electricity in the Baltic region. When it announced its latest decision on the public TV channel ETV it was underlined that it was a test purchase that would show if the transaction can bring profits for both sides. So far, the transaction has gone smoothly – it amounts to 100 thousand cubic meters of gas. The quantity is not very impressive taking into account that Estonia’s yearly gas imports amount to 700 million cubic metres (mcm). But it is a good start in sidestepping Russia’s Gazprom.

Estonia has also been developing energy interconnectivity with Finland. A few weeks ago Prime Ministers Taavi Roivas and Alexander Stubb reached an agreement to build two liquefied natural gas (LNG) terminals, connected by a pipeline, in both countries by 2019. The project is called Balticconnector and, if successful, will increase energy security of both countries, especially in the face of potentially unstable supplies form Russia. Both countries hope that the project will be co-financed from the EU funds.

The plans include the construction of a large-scale LNG terminal in Finland, which would then provide liquefied natural gas to both countries. A small-scale terminal will be built in Estonia. The aim is to the develop gas infrastructure in the Baltic region that would enable Finland and Estonia to access the underground gas storage in Latvia.

The project was initiated by the Finnish energy company Gasu and the Estonian Esti Gaas AS. The feasibility study was completed in May 2007. A preliminary environmental impact assessment programme was done in 2010. The pipeline is planned to be 79-kilometre long and will be laid at seabed of the Gulf of Finland, starting from Ingå in Finland. The other end will be built in Paldiski in Estonia. Earlier, an alternative rout was considered from Vuosaari (Helsinki) to Paldiski. But it would be a longer pipeline – 140-kilometre long, so finally the decision makers chose a shorter option. In Estonia, the pipeline will be connected with the existing DN700 transmission pipeline from Latvia. The capacity of the pipeline will be 2 billion cubic metres per annum.

Prime Minister Roivas told ETV that despite the fact that the original aim was to build a large-scale LNG terminal in Estonia, he is content to have reached an agreement. “Let’s start with the fact that Estonia will get its own terminal. True, not the regional one, but one which ensures energy security. Also, if the Finnish government for some reason will not proceed with the plans for the regional terminal by the end of 2016, it could be built in Estonia. From our point of view, it was important to move forward, after three years of negotiations that went nowhere,” Rõivas said.

Estonia, like other Baltic states, is energy dependent on Russia. Lithuanians have made a huge step forward and since December 2014 are proud of FSRU Independence (floating LNG storage and regasification unit to be used as an LNG import terminal). Estonians have only just entered a path to implement large energy projects. Of course, there is oil shale – Estonian exploration accounts for 70% of the worldwide exploration – but still Estonia is energy dependent on Russia. In October 2014 the office of Commissioner Gunther Oettinger warned that Estonia is the most energy depended EU member state. If Moscow holds on the supplies, gas that is stored in gas storage facilities could be used for four, maximum five days. The decisions that have been lately made in Tallinn by the government and Estonian companies are the light at the end of the tunnel.