Estonia will stop importing Russian gas by the end of 2022, the government agreed in principle on Thursday. Liquified natural gas (LNG) storage capacity in the form of a floating terminal will be created in Northern Estonia in fall.
"We must stop buying gas from Putin's regime as soon as we can since they are using the revenue from sales of it to fund their war against Ukraine," said Prime Minister Kaja Kallas (Reform) in a statement.
"We have decided to increase our national gas supply and to establish a facility in Paldiski for the storage of LNG so that a floating terminal can be taken into use from autumn. This represents an opportunity not only for Estonia but for our region more widely, to head into winter without any dependence on Russian gas."
Kallas said the government's aim is to favor gas produced from LNG in bolstering its supplies.
"What we are very much hoping to see from gas sellers is that their moral compass is pointing in the right direction in this regard," she said. "Moreover, our position in principle is that any LNG ship that reaches Paldiski should not be carrying Russian gas."
Estonia, Finland to adopt floating LNG terminal for joint use
On Thursday, Estonia and Finland jointly agreed to the joint leasing of a floating LNG terminal to guarantee the supply of gas to both countries.
Minister of Economic Affairs and Infrastructure Taavi Aas (Center) said: "We are in a unique position in the region here in Estonia in that we have the ability to set up an LNG floating terminal by this coming fall."
"We and our neighbors across the gulf felt it made sense to join forces and shore up the supply of gas to both our countries by taking into use a shared LNG terminal, which we intend to do later this year," he added.
Both countries will share the expense of establishing the quays, while the cost of renting the floating terminal will be shared according to how much gas each country uses.
In the best-case scenario, the projected cost of leasing the terminal to ensure the security of supply for Estonia will be from €10 million per year.
The Estonian and Finnish gas system administrators Elering and Gasgrid are working together to implement the plan.
The Ministry of Economic Affairs and Communications must now submit a draft amendment to the Natural Gas Act covering solutions to gas supply emergencies and approval of the tariffs for the use of the LNG terminal.
In order to further mitigate the risks associated with ceasing imports of Russian gas, a decision was also taken at the cabinet meeting to acquire up to 1 TWh of natural gas (approx. 20 percent of Estonia's annual gas consumption) via AS Eesti Varude Keskus.
This will be able to be sold to all market participants in the event of supply disruptions. The gas is planned to be stored in the Incukalns reservoir in Latvia.
Since the Baltic States and Finland as a region are strongly tied to Russian gas supplies, almost half a year's consumption would not be covered if the supply lines were cut. Finland consumes around 23 TWh and Estonia around 5 TWh of gas a year.
Editor: Helen Wright