Eesti Gaas chief: No 'emergency' in natural gas situation in Estonia

An LNG tanker ship arriving in the Lithuanian port of Klaipeda.
An LNG tanker ship arriving in the Lithuanian port of Klaipeda. Source: Eesti Gaas

There are no major issues with the supply of natural gas in Estonia, the head of monopoly supplier Eesti Gaas says, following news that Narva municipality has declared a state of emergency over uncertainty of supply ahead of the next autumn and winter and the need to decouple from the supply of Russian gas.

At the same time, Margus Kaasik, Eesti Gaas' CEO, did not deny there was no uncertainty whatsoever – adding this mostly arises from sellers not wishing to enter into any longer-term contracts.

High prices and the pace of development of a planned Liquefied Natural Gas (LNG) floating terminal at Paldiski, which once it is running could supply both Estonia and Finland, are also having their effect.

Kaasik said Friday that: "If you are asking us if there is a gas emergency in Estonia today, we don't see it that way. At present, gas deliveries are taking place in a completely normal way, while in the foreseeable future they will also do so. To date, we have been able to conclude a whole number of contracts, with which we have turned our previous supply channels into LNG-based supplies. This works today, and I think it works relatively well."

"The fact is that from January 1 of next year, three or even four TWh of gas are to flow through Klaipeda ... and through Lithuania to Latvia and Estonia. This gas will be in place, but the uncertainty is the reason why sellers often don't want so much to take on obligations that the buyers are demanding," said Kaasik.

Supplies via the LNG terminal at Klaipeda cannot be reserved for next year, which is behind much of this uncertainty, while the planned LNG terminal for Estonia is not likely to be on-line before year-end.

Eesti Gaas has around 1TWh of natural gas in reserve, he added.

Estonia's annual consumption demand for natural gas is around 5 TWh, though the bulk of this is in the heating system – 1TWh would cover much or all of summer, while the estimate consumption this year will be 4 TWh (higher prices may be behind the fall in demand from the 5TWh figure, while much also depends on the weather later on in the year – ed.).

Natural gas is at a high price at present in Europe (€180-190 per MWh), at a time when fears are that all Russian supply will halted, due to maintenance work on the NordStream 1 pipeline, he added.

Market participants are eagerly waiting for information about the completion of the Paldiski LNG terminal to reach the market as soon as possible, Kaasik added, noting that the sooner this happens, the better.

Overall Kaasik said he could not conceive of a scenario where protected consumers in Estonia or the Baltics were left without any gas supply in the winter.

Following an attempted natural gas procurement which fell through, the City of Narva declared a state of emergency, which will allow for natural gas heating to be replaced by more polluting energy sources such as oil shale burning. Much of the concern revolves around district heating – centrally controlled hot water piped in to many apartment blocks and which often uses natural gas in the heating process – as heating season (traditionally from October to March inclusive) starts to gradually edge nearer.

State electricity generator Eesti Energia said Thursday that the state of emergency could be declared, while the economics affairs ministry said it could be a matter for local government, hence the Narva decision not being replicated nationally.

A state of emergency was not even called nationally during the worst of the Covid pandemic, but rather the lesser "emergency situation".


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Editor: Andrew Whyte

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