Integrating the gas networks of Finland and Baltic countries

Eeva Sani

The Finnish natural gas market is relatively small and isolated, with a pipeline connection to Russia. The demand for natural gas is expected to increase in Finland in the future and the current gas supply volume via the existing transmission pipeline from Russian Karelia will become inadequate. Finland is now investigating possibilities to link gas networks with Lithuania, Latvia and Estonia to ensure security of supply through connection to the rest of the European Union.

Studies commissioned by the Finnish natural gas company Gasum and the gas companies of the Baltic Countries, on the feasibility of a gas pipeline running across the Gulf of Finland, have been completed.
     
According to the assessment, there are no technical obstacles to building a gas pipeline from Inkoo in Finland to Paldiski in Estonia. The cost would be between EUR 100-120 million.

 Natural gas markets in Finland

 Natural gas satisfies around 11 per cent of Finland’s total energy requirement. Natural gas is imported to Finland from Russian western Siberia without any supply interruptions over 35 years.

” The use of natural gas will  likely increase in the future, but the use of fossil energy as a whole will decrease. Or at least it should decrease”, says Satu Hassi, Member of th European Parliament for the Green League.

Currently, there is only one importer and wholesale supplier ,Gasum, which also owns and operates the transmission network. Retail supply of gas is undertaken by about 30 companies, supplying gas to designated distribution areas.

“The security of Finnish gas supply will improve if Finland had also another source to import gas”, says Mauri Valtonen, Senior Inspector from Finlands  Ministry of Employment and the Economy

In contrast to the rest of Europe, major institutional consumers are the dominant natural gas users in Finland. In 2009, 66 percent of the total Finnish natural gas consumption went to combined heat and power generation in municipal and industrial power plants.

“One solution  to improve the self-sufficiency in natural gas use in whole European Union area is to improve the energy effiency of buildings, because major part of natural gas use is currently   directed to heating”, says Satu Hassi  

Balticconnector

Balticconnector is a planned natural gas pipeline between Finland and Estonia. It will link the Finnish, Estonian and Latvian natural gas grids. The Baltic Energy Market Interconnection Plan, launched by the EU Commission in 2008, examines the possibilities to construct a natural gas pipeline between Finland and Estonia, and the possibility to construct a shared liquefied natural gas- terminal (LNG) for Finland and the Baltic countries. The final report of Balticconnector study project will be completed in spring 2011.

“Balticconnector will enable to trade gas to much larger region than currently.  The coherent market-area will support the possibility to construct a shared LNG-terminal. Another option is pipeline to Norway which is more expensive”, says Mauri Valtonen.

“The final investment decision is made by the gas companies, it is difficult to predict will the project be realized and what is going to be the schedule “, Valtonen adds.

If Finland and the Baltic Countries were to decide together to build a terminal for liquefied natural gas, imports would be possible by ship, from the Middle East or Algeria, for instance. Setting up an LNG terminal requires cooperation, because such an installation would be expensive, and would require a large market of users.

“If the Balticconnector will be realized it is a major factor to improve Finlands gas markets and it will also give us more market potential to import LNG. The connection to Latvian natural gas grids will also balance the import of gas”, says Hannu Kauppinen, the Director of Finnish Gas Association.

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One Response to “Integrating the gas networks of Finland and Baltic countries”

  1. peterverweij Says:

    Good story, interesting information, balanced sources. The article focuses on the Finnish position, would have liked more about the EU policies here. How does Finnish position fits in the EU position? You have created some links in the text to documents.

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