European Commission recommends Estonia to conclude gas agreement with Lithuania

PHOTO: Corbis / Scanpix

Given that a new terminal for liquefied natural gas (LNG) at Klaipeda, Lithuania will start work at the end of this year, the European Commission advises Estonia to conclude an agreement with Lithuania for the supply of protected customers in Estonia in case of an emergency with gas.

In the case of Estonia and Finland the share of natural gas in the energy mix remains rather low at around 10 percent, although such level should not reduce the risk perception vis-a-vis a disruption of gas supply nor the thoroughness of necessary preventive measures, the Commission says in its report on the short term resilience of the European gas systems.

Even in the scenario of a one-month disruption of all Russian gas flows, there would be important gas shortages for non-protected customers in Estonia and Lithuania. In the absence of the Klaipeda LNG terminal the situation would be more dramatic in Estonia as there would be no gas in their system, including for protected customers, within 4-5 days.

The ability of the three Baltic countries to face a severe disruption relies to a large extent on the possibility to use two key infrastructures: the Incukalns gas storage in Latvia and the Klaipeda LNG terminal in Lithuania that will be operational as of December 2014.

In this context, a clear framework for third party access rules to the Incukalns storage as well as to the gas transport system that connects it with the demand areas is a precondition for the full exploitation of potential regional solutions that the Incukalns storage can provide. Such access is necessary to ensure that gas from the Klaipeda LNG terminal can be stored in Incukalns and transported, through the Latvian gas system, to Estonia.

The Commission has afforded the ending of energy isolation in the Baltics the highest priority and has therefore considered a regional LNG terminal in the Gulf of Finland as part of an appropriate solution together with the Balticconnector interconnector between Estonia and Finland interconnector. The project is featured in the list of key infrastructure projects for the EU.

Besides Estonia should ensure the feasibility of fuel switching during emergencies. In the light of the role of fuel switching in an emergency, authorities should consider an increase of alternative fuel stocks or fuel stocks obligations.

Estonia is advised to ensure clear third party access rules to its gas system. It is of utmost importance that access to the gas transport system is clearly established in a non-discriminatory manner allowing for undertakings to meet their obligations in ensuring supply to its consumers. Estonia should consider the introduction of third party access rules even if it benefits from a derogation under the Third Energy Package, the Commission said.