Minister: Estonia to be fully independent from Russian gas by fall
The Estonian-Latvian-Finnish LNG capability planned to be built in Paldiski will be completed by fall, but Estonia actually doesn't consume a single molecule of Russian gas even now already, Minister of Economic Affairs and Infrastructure Taavi Aas (Center) said on Tuesday.
"The significant decision has been made by Estonia to build a pier in Paldiski in order to receive a liquefied natural gas (LNG) regasification ship and build the pipe connections that will allow the regasified LNG to reach Estonia's gas network," Aas said on Vikerraadio's "Uudis+" news program on Tuesday, speaking about plans underway to achieve independence from Russian gas. "We are moving forward with this."
According to the minister, the construction of the pier designed to serve a floating storage regasification unit (FSRU) has been fuel retailer Alexela's project from the get-go.
"We must be grateful to them for having led this project thus far; it is thanks to this foundation laid by them that we will be able to build LNG capacity by fall — at world record pace," he said. The state is only just discussing what guarantees should be granted to Alexela for their establishment of the pier.
The next step for Estonia will be to lease a ship outfitted to serve as an FSRU. "In order to start using the LNG, we also need a ship, as I said," Aas said. "We're cooperating with Finland and Latvia on this front. This ship is coming to Paldiski as a joint solution, and it will ensure our ability to accept LNG starting this fall already."
Compared to its neighbors to the north and south, Estonia is the smallest consumer of gas of the three.
"Estonia has made significant changes to its district heating, which is why we are in pretty good shape, but we're still using 5 terawatt[-hours] a year, especially in winter," the infrastructure minister explained. "If Finland and Latvia join us for the LNG ship project, then their contributions will be bigger, as the ship will be paid for in proportion with consumption."
A joint venture will be established to handle the vessel. "We will need to look at network operators in Estonia, Latvia and Finland, but who specifically will be the one handling payments for the ship is a matter of a technical agreement," he said. "This is going to be a joint venture."
Enough gas in reservoirs to last through end of summer
The Latvian minister of economics is currently in the U.S. seeking partners for cooperation, and according to Aas, the Latvians hope to find long-term solutions in addition to the planned Paldiski terminal.
"It's important to understand here that our only chance of finding a solution by this fall is in Estonia, in the form of an FSRU in Paldiski," Aas said. "Both Latvia and Finland are seeing permanent solutions for building terminals for themselves, which is what the Latvian minister is working on in the U.S. Construction of a permanent terminal takes two years — they certainly won't have this solution by this fall."
The minister was unable to say, however, how much more expensive gas will get for regular consumers as LNG is adopted.
"We certainly don't know the cost of gas on the global market this winter, but we have already reached the point where Russian gas and LNG cost around the same," he explained. "Which is why Lithuania said that they won't be buying Russian gas. At the same time, none of us are buying Russian gas right now, because it's so expensive. Estonia's gas connection with Russia is currently undergoing repairs as well. So actually, we can say, just like the Lithuanians, that we don't have Russian gas."
According to Aas, what is currently known is that if all three countries definitely contribute to the project and the vessel is working at peak capacity, then the price of gas would go up €4-5.
"What is most important is security of supply," he said. "A supplementary budget is in the works. We have proposed that if energy prices remain high, that they are compensated for private consumers. Let's wait until negotiations are complete — then we'll be able to comment."
Lithuania's Klaipeda terminal is prepared to accept 30 terawatt-hours, and Estonia's region is short another 30 terawatt-hours. "There is an LNG station in Finland as well, but it has a capacity of 5 terawatt-hours," Aas said. "The Latvians have 8 terawatt-hours of gas in reserves. Should supplies be cut off immediately, then there is enough gas to last through the end of summer. There is enough gas to last until the Paldiski terminal is brought online."
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Editor: Aili Vahtla