Elering: LNG Terminal Crucial for Gas Market Liberalization
A newly-released report commissioned by Elering, Estonia's electric power transmission system operator, has concluded that building an liquid natural gas (LNG) terminal would have to play a central role in any efforts to open up the nation's gas market to competitors.
The report, conducted by Pöyry Management Consulting, stated that the main dilemma the Baltic countries and Finland face in liberalizing their gas markets is that the individual markets are too small to attract suppliers and there's currently only one supply chain.
Connecting the gas markets of the four countries and building the LNG terminal in one of them is the most logical solution, it said.
"This should result in a regional market and increased competition in Estonia, and should lessen the dominant position of one single market participant in the whole value chain of the local gas business," the report said, alluding to the fact that the countries are currently served by a single supplier, the Russian energy giant Gazprom.
The idea of a common LNG terminal for the region is nothing new - it was included in the European Commission's 2008 Baltic Energy Market Interconnection plan. Agreement on which country will host the terminal has so far not been reached, however.
For market liberalization in Estonia, the report said, gas distribution grid operator EG Võrguteenus needs to be separated from its owner, monopoly supplier Eesti Gaas, similar to the way Elering was once separated from the power producing company, Eesti Energia.
The Ministry of Economic Affairs is pushing for just such a move as part of implementing the EU's third energy package, which requires the separation of energy production, transportation and sales.
However, Eesti Gaas, which is 37 percent owned by Gazprom, is resisting the government's unbundling plan, saying that it is unnecessary for competition and will drive up prices.
Steve Roman