Estonian minister: No basic comparison of LNG terminal projects yet

Eesti LNG projektid.

PHOTO: graafika: Alari Paluots

The Baltic countries and Finland have not yet made the choice between the different locations for the regional terminal for liquefied natural gas (LNG) because there simply is no basic comparison of the different projects, Estonia's Minister of Economy and Communications Juhan Parts said.

"The consultancy Booz&Co has produced two reports for the EU Commission, however, both handle the projects in a different way," Parts said in his remarks at a seminar on connecting the Baltic countries to Europe's gas market on Wednesday.

He said that the extensive study published in November did not contain sufficient information about the Finnish terminal option, because it was added in the final stages of the study.

Second, the quantitative analysis provided for the BEMIP working groups followed different assumptions about the terminals. In case of Finnish terminal, it is assumed to have an impact on Finnish, Estonian and Latvian gas supply. In case of both Estonian terminals, they are assumed to have an impact on Estonian, Latvian and Lithuanian gas supply.

The Estonian minister said that even though we perhaps do not have a clear comparison of the terminal projects, we have the next best thing: three criteria agreed in the BEMIP framework. The first of these criteria is the terminal operator's independence. "One regional terminal, one EU grant – if this is spoiled by Gazprom's connections, we probably won't get a second chance," he said.

The second criterion is economic viability and the third criterion, political consensus.

"A political agreement is possible if the regional terminal caters to all the needs in the region. The Baltics need quick price arbitrage within two or three years, and Finland needs potentially larger volumes of gas in a longer-term perspective. Both are equally important," Parts said.

The minister stressed that creating a truly functioning gas market was one of the key energy policy challenges in the region and that, in his vision, a positive outcome would benefit consumers and the overall competitiveness of the region's economies.

"Gas would indeed nicely fit into the Estonian and regional energy portfolio. All of the main energy consuming sectors could benefit from a competitive gas supply," said Parts.

LNG could be used for district heating for cleaner and hopefully more affordable solutions in rural areas as well as in towns, and it might be used as a bunkering fuel to meet the sulphur content limitations applied in 2015. There are also many reasons that make gas-based power production an attractive alternative, since it is relatively clean, uses well-tested and affordable technologies, and has potential to balance renewables, Parts said.