An unexpected shutdown of Balticconnector is to result in millions in losses

  • 2020-04-06
  • Kalev Reiljan

Estonian and Finnish energy companies submitted a joint appeal to the governments and national system operators to postpone for one year the almost complete shutdown of the transnational gas pipeline Balticconnector that is planned for a month. Otherwise, the shutdown will result in several million euros of losses and also endanger the reliability of Balticconnector in the future.

In their joint appeal the energy companies of the Baltic States and Finland note that they cannot agree with the plan of AS Conexus Baltic Grid to stop operation of Balticconnector pipeline between Estonia and Finland for entire May at such short notice and at the time which is critical enough already. The stoppage is planned due to the unexpected plans of the company to reconstruct the Vireši-Tallinn pipeline section.

“We have in good faith tried to reach an agreement with Conexus regarding postponement of the reconstruction works, however, our attempts have been unsuccessful. Therefore, we call on the system operators and the Latvian government to find a solution to postpone the planned work for one year,” said Kalev Reiljan, a member of the management board of Elenger OY, one of the signatories of the appeal. “Otherwise, we will be forced to file a claim for damages for millions of euros in connection with additional expenses”.

“The advance notice time of just one month does not let the market participants find reasonably priced supply sources. Many gas sales contracts are concluded for a year and the market participants have relied on them in making their plans,” explained Kalev Reiljan on behalf of the signatories. “The governments, companies, and consumers have found themselves in an extremely challenging situation due to the virus crisis, and the additional expenses will only make it more difficult”.

According to the representatives of the energy companies, the planned reconstruction works have not been approved by the system operators of Finland, Lithuania, and Estonia, which calls into question the reliability of the connection in the future. “This will undermine cooperation between the countries, the reliability of the connection itself and the energy security of the entire regions,” said the spokesman for the energy company.

At the end of March, AS Conexus Baltic Grid issued a notification to energy companies indicating that it intends to start reconstructing the Vireši-Tallinn gas pipeline, which will shut down Balticconnector for the entire May. Despite the request of the Baltic States and Finland companies to postpone the works, no agreement has been reached that would satisfy all the parties involved. Thus, on 3 April 2020, the energy companies presented a joint appeal to the Latvian government as well as the system operators of Estonia, Latvia, Lithuania, and Finland to find a solution.