Estonian market not significantly affected by Russian gas cuts

The Estonian end of the Balticconnector gas pipeline in Paldiski.
The Estonian end of the Balticconnector gas pipeline in Paldiski. Source: Siim Lõvi/ERR

Neither Russia's decision to cut off gas supplies to Finland, nor Lithuania's abandonment of Russian gas, will significantly affect the Estonian gas market.

Estonian gas suppliers Elering and Eesti Gaas are discussing the likelihood of the situation becoming more tense, as well as the potential for small price increases. However, Estonian consumers are assured of sufficient gas supplies held in reserve.

Lithuania announced on Friday that it would stop consuming Russian energy, and, in practice, Latvian and Estonian gas sellers are also trying to do the same.

Most of Estonia's gas consumption needs are covered by LNG (liquified natural gas) procured from the Klaipeda terminal in Lithuania.

To cover the Baltics, there is also an underground storage facility in Latvia containing enough gas to supply the region with 21 terawatt-hours of energy.

From Saturday May 22, gas supplies for Estonia's northern neighbors depend solely on the Balticconnector, the bi-directional pipeline linking the Finnish and Estonian gas grids.

"It is not us who are in the most danger, but Finland, because they are at the very end of a long line, and after the disruption to their supply from Russia, they now have only one connection through which their gas consumption can be covered," explained Taavi Veskimägi, the head of Elering.

As gas prices are global and most short-term gas trading decisions are made on the basis of the gas price index, supplying gas to Finland through the Balticconnector does not affect prices in Estonia.

"Today we see that, on the whole, the situation with gas in the Baltic market has become more complicated due to the fact that the Finns no longer buy from Russia and also because there is less of this gas here. The price has increased slightly in our local market, but not very much in the grand scheme of things," said Margus Kaasik, head of Eesti Gaas.

Work underway on the Balticconnector in Paldiski. Source: Eesti Gaas

"Provided there will not be an additional limitation in that demand should not be completely covered by supply, the price could go up further in the Baltics and Finland" said head of Elering Taavi Veskimägi.

Although the cessation of gas imports from Russia will affect the entire Baltic region, Estonian gas companies are optimistic about the winter.

"It just means that we need to get more LNG-based gas, and fortunately we have managed to do that by the end of the year, in the fourth quarter.

Recently, the capacity of the Klaipeda terminal was shared and we got our part of it. This will definitely improve our feelings (about the situation) and those of our customers as we go into winter, "said Kaasik.


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Editor: Michael Cole

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