Estonian dependence on Russian gas is in the past, says Elering chief (4)

Hot: Eesti Gaas (ERR)
12/30/2015 3:29 PM
Category: Economy

Estonia's one-way gas dependence on Gazprom and Russia is in the past, which should mean natural gas, as an environmentally friendly fuel, should be used more in the Estonian economy, says Elering CEO Taavi Veskimägi, adding that Elering's priority is the creation of a common gas market in Finland and the Baltics.

For years Estonia's gas dependence on Russia was seen as a security threat, Veskimägi said, adding that this has now changed and Estonia should use more gas.

From January 1, the Estonian gas network will belong to Elering. Elering purchased Gazprom's 37-percent stake in the nation's gas transmission network in the summer, having purchased over 51 percent at the beginning of 2015 from Finnish Forum Heat and Gas OY. Elering paid Gazprom 19.9 million euros and Forum 27.5 million. Previously, Elering had only operated Estonia's power grid.

Energy security expert Andres Mäe said the Balticconnector gas pipeline between Estonia and Finland will raise prices in Estonia. “This will increase the transmission network price for natural gas as someone must pay for the construction of Estonia's side of the pipeline,” he said.

Mäe added that Finland will win the most as it will then have access to Latvia's gas storage facilities. He said that the price hike for Estonian consumers will probably be small as the EU is picking up 75 percent of the bill for the construction.

Veskimägi said the pipeline will only be useful if it creates a common gas market between the four nations, creating a larger market with more companies offering gas. Besides the pipeline between Estonia and Finland, the rest of the Baltic nations must also be connected. He said work is currently being done on cost estimates for Balticconnector and the project is top priority for Elering.

Estonia still purchases the majority of its gas from Russia, although gas imports from Lithuania have jumped to 20-30 percent of the market in less than a year. Gas from Lithuania also originates from Russia, but Estonia now imports much of its gas through Lithuania as Russia sells gas to Lithuania cheaper. The rate for Lithuania is calculated on six-month world oil prices, while for Estonia it is calculated on the 9-month average and since oil prices have dropped quickly, Russian gas is sold cheaper to Lithuania.

J.M. Laats

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