Elering Chairman Criticizes Gas Exchange Plan

1/5/2012 10:01 AM
Category: Economy

Taavi Veskimägi, chairman of the national power grid operator Elering, has criticized a plan by Eesti Gaas and Finnish gas provider Gasum to set up a joint Finnish-Estonian natural gas trading exchange.

In late December, the two companies signed a protocol of joint intent for setting up such an exchange. The move was made in preparation for creating a common gas market in Finland and the Baltic states once liquefied natural gas (LNG) terminals are built in the region.

However Veskimägi, whose company has taken preliminary steps towards establishing an LNG terminal at Tallinn's Muuga Harbor, told ERR radio on January 4 that the gas exchange planned by Eesti Gaas and Gasum can't be taken seriously, as it would stifle the development of a transparent, competitive market.

“The gas exchange in essence is not a bad thing if it is set up on the basis of the law, acts under the supervision of a regulator and is the partner of an independent system director. But if the exchange is set up [...] by the same [company] that is the sole supplier of gas, then the creation of such an exchange will only deepen the distortion of the gas market in Estonia and lead to further concentration of the market,” he said.

Eesti Gaas and Gasum are owned 37 percent and 25 percent, respectively, by Russian energy giant Gazprom, which is currently the monopoly supplier of gas to the Baltic states.

The idea to link up the gas networks of the four countries and build an LNG terminal in the Baltics is seen as a way to allow new players to break Gazprom's hold on the supply chain.

Another step seen by the Estonian government as crucial to market liberalization is the unbundling of the country's gas transmission network from the supplier Eesti Gaas, an issue that is on the agenda for the January 5 Cabinet meeting.

 

Steve Roman


See also

Comment