Gas Association: Estonian operators' access to LNG terminal still unclear

A gas hob.
A gas hob. Source: Priit Mürk/ERR

According to Heiko Heitur, executive director of the Estonian Gas Association (Eesti Gaasiliit), the moving of the LNG terminal to Finland had been expected by market operators. However, Heitur believes that it sends a bad signal and it is still not clear how Estonian market participants will gain access to the terminal.

"For a long time, there were signs in the air that this ship was probably going to go to Finland. But at the same time, it is a very big disappointment for Infortar and Alexela, who worked at a world record pace in Paldiski to get the berth ready quickly. I should say that it is not only a disappointment for the gas sellers, but also for the industry (in general) and ordinary consumers. The state has failed to protect the security of Estonia's supply in a crisis situation and has not worked hard enough to ensure that our economy gets gas at the lowest possible price," Heitur said.

"Estonia's economy, gas market operators, consumers and the state itself will all lose out from this decision, which sends a rather bad signal to the wider public," Heitur said. 

The Ministry of Economic affairs and state grid distributor Elering have both said there will be no shortage of gas in the region. "If we look at the gas sellers in Estonia, both the Ministry of Transport and Energy as well as Elering are well aware that supplies for the new year should come from the new terminal. Therefore, if gas sellers are unable to access the Finnish terminal, there will be a situation where Estonian they cannot get gas from anywhere."

According to Heitur, this could mean that foreign companies with access to the terminal end up driving Estonian gas traders out of the market. "Security of supply, Estonian style - a neighbor comes, sells and leaves with the profits," he said.

"While the news reported that Estonian gas providers could have preferential access to (gas) capacities, today this exists purely on paper. In 2014, the Finns promised to build a terminal - they didn't build it. In the spring, there was an agreement that the ship would go to where the terminal was completed first - this has also not happened. Now, for the third time, we are supposed to believe that we are going to get gas from Finland. It would be nice if that were the case, but it's much more complicated from a technical and practical point of view," said Heitur.

According to Heitur, there is currently a lot of confusion about the rules regarding how gas will be distributed. "The usual practice is that gas providers order the gas and pays for it themselves. Whoever operates the terminal does not take these kinds of risks. How the sharing will be done with limited resources is going to be very complicated. We know that two ships are coming in in January - that means that Finland itself will be able to consume almost two terawatt-hours. If the Estonian gas providers can get access, there will be access even if they can only get 100 gigawatt-hours. But, in reality, more gas is needed."

According to Heitur, there are also big risks for Estonian gas providers. "For example, if you order a ship, you are essentially paying €200 million, and if something should happen to the Balticconnector, then whatever happens to the gas, also happens to the gas provider. There are a lot of risks."

"The rules should be put in place as soon as possible, so that there is an understanding of how, on what terms and at what risk it is possible to get gas," Heitur said. "Usually, one company orders the gas and pays for it. It certainly can't be the case that five gas sellers order a vessel together and pay the supplier. Somebody has to bring it in and resell it to other players in the market."


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Editor: Michael Cole

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