Eesti Energia chair calls for 'state of emergency' over natural gas supply

Natural gas terminal.
Natural gas terminal. Source: Eesti Gaas

The board chair of state energy generator Eesti Energia is calling for a state emergency to be declared ahead of next winter due to the possible lack of natural gas supplies or their alternatives.

Hando Sutter, Eesti Energia board chair, referenced the term, "Hädaolukord",* which would be necessary due to the ending of natural gas supplies from Russia while a planned Liquefied Natural Gas (LNG) terminal at the port city of Paldiski may not be ready in time.

He said "An emergency situation relating to the natural gas supply should be declared as soon as possible."

Doing so so far ahead of heating season would give generators and industrial users time to apply for the certification needed from the Environmental Board (Keskkonnaamet), he added.

"If we don't start dealing with this right away, heating season will soon be upon us, by which time it would be too late to start making the changes," Sutter went on.

"Then extraordinary measures should be taken today to reduce gas consumption and replace it with other energy sources if possible," he said.

Sutter took Narva as an example of the latter; shale oil could be used to provide district heating – hot water piped in centrally to many apartment blocks – he said, given that a cogeneration power station whose by-product of hot water could be used for the same purpose will be undergoing maintenance this month.

Exemptions should also be obtained to bypass strict environmental requirements with regard to the shale oil burning, he added, for instance saving on costs of filters aimed at keeping fuel oil residues away from the environment.

Other technical work and the purchase contracts for the shale oil, or any alternative fuel to natural gas being used, is also needed – Eesti Energia itself needs to estimate how much shale oil it needs to produce, i.e. to refine from shale mined in eastern Estonia, and to stock up, ahead of winter.

Ministry deputy secgen: Any state of emergency should be declared by municipalities

Timo Tartar, deputy secretary general  at the Ministry of Economic Affairs and Communications, concurred that a state of emergency could be declared, but said that this should be down to local municipalities rather than the state.

He said: "It is necessary to declare a state of emergency at local government level, in order to be able to use other fuels relating to district heating for a lengthier period of time," said Tatar. "However, there is no need to directly declare an emergency regarding the national natural gas market."

The planned Paldiski LNG terminal does not guarantee natural gas will be delivered to the network at an even tolerable price even if it is up and running in time, he added.

Hando Sutter referred to this as passing the buck, however.

"If the municipalities ask why they should we declare an emergency in district heating when there is no emergency regarding natural gas supplies … this would be a 'dead circle', while someone would have to make the first move," adding that the environmental issues outlined above could only be addressed via a national state of emergency.

Tatar rejected the idea that the absence of a national decision imposes any restrictions on a municipality, while, since time is of the essence, municipalities could start declaring their states of emergency in the summer, particularly if it became apparent that natural gas supplies were not going to be sufficient for district heating needs.

LNG prices may still be high in relation to the world price even once the terminal and the infrastructure planned for Paldiski is up and running, he added

AS to the Baltic-Finnish region, the annual demand of around 60 TWH (only about 5TWh of which pertains to Estonia – ed.) of natural gas is at present only guaranteed to a maximum of 39 TWh, market participants say, which will not be sufficient for the winter.

Hando Sutter said: "This amount is not enough to cover the entire gas supply of the region for the upcoming heating period. Estonia and Finland are working together to create the additional LNG receiving capacity by the end of this year, but until this terminal actually goes online, there is no total certainty that the necessary additional LNG supplies to the region will actually arrive by the end of this year."

Sellers also desire to know what sort of agreements between the neighboring states are in place, for instance regarding gas stored in Latvia, should the latter wish to utilize it in an emergency – pipelines between Latvia and Estonia and also between Latvia and Finland (Balticonnector) can supply the actual gas itself.

Sellers await a response to their memorandum from the economics affairs ministry, and are ready to further explain their positions where needed, they say.

Heating season traditionally runs October to March inclusive.

Estonia is set to stop importing any Russian natural gas as of the end of this year, while the state has declared an emergency reserve of 1TWh is to be held.

*The official term for "State of Emergency" ("Erakorraline Seisukord") as defined in the Constitution, was not the term which Sutter used ("Hädaolukord"). The less severe "Emergency Situation" ("Eriolukord") was declared early on in the Covid pandemic.


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Editor: Andrew Whyte

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