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Although the Finnish Ministry of Economy saw the Estonians as shareholders of the Inkoo LNG terminal, the government put an end to their hopes and expectations.
When it became clear on October 10 that the floating LNG terminal would not be coming to Paldiski, both the Finnish and Estonian ministers of economy had a message ready to reassure the public and the gas sellers. It was jointly announced that Estonia will have priority over other market participants at the Finnish terminal, and gas will reach Estonia from the other coast of the Gulf of Finland. However, as time passed, the realization of this promise has become more and more questionable. At the beginning of November, the Ministry of Economy of Finland told ERR that if Estonian gas sellers want to get preferential rights in the terminal, we should first acquire a share in the company that will operate the terminal, FSRU OY, due to European rules. In other words, make the move which the system operator Elering decided to refuse in the summer citing the interests of consumers.
However, the government confirmed yesterday that this step will not be taken and that the costs of the Finnish terminal will not be met with the Estonian taxpayers' money. The 30 million euros allocated to Elering in the supplementary budget will instead be redirected to the Estonian Stockpiling Agency so that they can use this money to buy more natural gas for the state reserve.
According to the Ministry of Economy and Infrastructure (MKM), giving up share in the terminal does not automatically mean that Estonia will lose the preferential right. According to the Estonian side, the European gas directive allows priority in joint purchases even without the participation cited by the Finns. The Estonian Ministry also believes that the Estonian side has already contributed enough to the project with the construction of the Paldiski mooring pier, so that the participation point required by the Finns has been met. Clarity should be brought to the interpretation of the European gas directive by the cooperation agency of the energy market regulators of the European Union, ACER, with whom Finland is currently consulting. The exception request can be submitted by the terminal operator and must be approved by the Finnish Competition Authority. When and whether this will be done is currently unknown. However, public consultations on the terminal rules will end on November 11.
According to MKM, there is currently no possibility for Finland to apply for preferential rights only to its own gas sellers. “If the provisions for temporary preferential treatment of Estonian and Finnish gas consumers should not be included in the terminal rules, then the terminal will be equally accessible to all gas consumers of the European Union countries. The option that the Finns would keep the floating terminal only for their consumers has never been discussed. Considering the large regasification capacity of the terminal, it would also be essentially unjustified,” said MKM spokesperson Kadri Laube.
According to Marko Allikson, member of the board of the energy trader Baltic Energy Partners, nearly all gas sellers of the Baltic countries have their own companies and customers in Finland, which is why almost all Baltic gas sellers could benefit from the exception made only for Finnish gas sellers.
According to the manager of Eesti Gaas, Margus Kaasik, it is still unclear to the market participants whether the preferential gas purchase right is still guaranteed without participating in the Finnish LNG terminal. “I cannot comment on whether and how this privilege can be obtained there in Inkoo, or what the Finns are willing to give it in exchange for and what criteria they set for it,” said Kaasik.
When asked to which extent Eesti Gaas has reckoned with the Finnish terminal, considering its customers, Kaasik answered that to a considerable extent. “Our current knowledge is that the amount of gas received from Lithuania does not cover our entire portfolio, because in addition to Estonia, we also have customers elsewhere: in Finland, Latvia, Lithuania. We definitely want to get some gas through the Inkoo terminal as well; we want to get a considerable amount from there, so in this sense the Inkoo terminal is very important for us.”
According to Elering, by the end of October, Estonian gas sellers had stocks lasting until February. Elering stated that to be able to supply all customers with gas by the end of April, the Estonian market participants should purchase more gas in the amount of one terawatt hour.
According to MKM, this should not cause problems in the current market situation. “That the Baltic-Finnish gas market has purchased excess gas and is ready to sell gas to each other was well proven by the last gas procurement of the Estonian Stockpiling Agency, which received several times more offers than the quantity requested in the procurement. Therefore, Estonian gas sellers can supply their customers with gas even if they are unable to get a place at the Inkoo terminal for the time being,” said spokesperson Laube.
According to Baltic Energy Partners board member Allikson, the timely launching of the Inkoo LNG terminal is more important for Estonia and the entire region than the issue of preferential access. “If the LNG terminal in Inkoo starts up in December, it will not be very difficult for Estonian gas sellers to acquire the necessary natural gas this winter. This is because the consumption has decreased significantly compared to a year ago and in Finland by more than half,” Allikson explained.
According to the energy expert, Finnish gas buyers should actually seek cooperation with gas sellers in Estonia and other Baltic states once the terminal starts up, as this would enable more optimal use of the terminal's capacity. “It seems to me that the state's decision not to invest in the Finnish LNG terminal is rather reasonable in this context,” the energy trader assessed the decision.