Estonia to keep fifth of yearly natural gas supply in strategic reserve

Eesti Gaas trucks.
Eesti Gaas trucks. Source: Siim Lõvi/ERR

The Estonian state is to keep around a fifth of Estonia's annual natural gas needs in the form of a reserve, as part of efforts to decouple from dependency on Russian supply in the wake of the Ukraine war.

The reserve, which amounts to 1 TWh of natural gas, is not intended as a permanent replacement for Russian natural gas, however – that role falls to Liquefied Natural Gas (LNG) supplies once a planned terminal at Paldiski is up and running.

In addition to the strategic aspect, economic considerations are also at play; Margus Kaasik, board chair at natural gas supplier Eesti Gaas, noted that while the private sector is also stockpiling gas for next winter, a fall in price might erode this.

"[The state reserve] will make the situation of all our gas customers more secure," Kaasik said.

Estonia consumes around 5 TWh of natural gas per annum, with gas of Russian origin currently accounting for 80 percent of this.

Around 60 percent of this total usage relates to the "heating months," meaning from around October to March inclusive.

Rein Vaks, head of energy markets at the Ministry of Economic Affairs and Communications, said of the strategy: "Another aspect we can see that can be carried out quickly is to cut gas consumption. In a situation where we do not have LNG on the market yet and no other back-up, it is possible to save another terawatt-hour in respect district heating by replacing this consumption. This should be especially in the Tallinn and Narva regions, where gas is currently used the most in district heating."

District heating consists of hot water piped in centrally to many apartment blocks during the winter months; while natural gas is often used in its production, hot water as a by-product from power stations in Ida-Viru County is also utilized for this purpose.

Kaasik added that 1 TWh of stock, not a huge amount in global terms, is scheduled to be purchased by the end of October this year.

Other options include private firms selling their stocks or using storage facilities in Latvia to make up for a lack of same in Estonia.

Ultimately, Vaks said: "The first preference is definitely to look for supplies from where no extra euros are going to Russia - the aggressor nation."

The planned LNG terminal would see a vessel moored either off Paldiski or off the coast of Finland, and this would be replenished with LNG which would then be piped to the mainland and also across the Gulf of Finland, in either direction.

While the hopes are for the terminal to be ready as early as this fall, progress has faltered following a break-down in talks between the gas grid distributor, Elering, and the two private sector firms – Alexela and [Eesti Gaas owner] Infortar – who would build the quay necessary to accommodate the LNG vessel; the vessel itself has not been procured yet.

The state also says it will not use the planned 1 TWh reserve as a way of mitigating any price rises in natural gas, and the idea is simply for the worst-case scenario.

Ain Köster, head of comms at Elering, said: "It is still quite, quite unlikely that a private consumer would be left without gas. We should not be so terribly worried about it," adding that natural gas only makes up 6-7 percent of Estonia's annual energy consumption needs.


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Editor: Andrew Whyte

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