Estonia, Finland planning to jointly rent LNG terminal

TALLINN – Estonian Minister of Economic Affairs and Infrastructure and Finnish Minister of Economic Affairs Mika Lintila agreed that Finland and Estonia will jointly rent a liquefied natural gas (LNG) floating terminal, which will ensure security of gas supply in the two countries.

"The supply of natural gas to both Estonia and Finland is heavily dependent on Russia, which is why we have to secure our back in the current unstable time and create a readiness to give up gas from Russia. Together with our northern neighbors, we found that it is most sensible to join forces and ensure the gas supply of both countries through the introduction of a common liquefied natural gas terminal still this year," Minister of Economic Affairs and Infrastructure Taavi Aas said in a press release.

"Due to the war in Ukraine, we must also prepare for a possible disruption of gas imports. An LNG floating terminal is an efficient way to secure gas supply, including in industry. I thank the Estonian government for the smooth cooperation," Finnish Minister of Economic Affairs Mika Lintila said.

The plan stipulates that Estonia and Finland will establish the necessary hauling berths for servicing the LNG floating terminal and that the necessary floating terminal, which can be used by both countries and on both shores of the Gulf of Finland, will be rented together. The necessary hauling berths will be built in Paldiski, Estonia, and in Inkoo, Finland.

The LNG floating terminal is planned to be brought to the area in the fall and will first be installed next to the hauling berth, where it can be done the fastest. In the future, the location of the floating terminal will be based on the needs and sizes of the market. Hauling berths on both shores of the Gulf of Finland will increase security of supply for gas customers in both countries and add the necessary flexibility for using the floating terminal.

The construction of the necessary hauling berths will be borne by both countries and the rental costs of the floating terminal are planned to be shared based on the countries' gas consumption volumes. The estimated cost of renting the floating terminal needed to ensure Estonia's security of supply will be in the order of 10 million euros per year for Estonia in the best case scenario. The national gas system operators Elering and Gasgrid are cooperating to implement the plan.

The agreement between the countries provides a quick solution to ensuring the security of gas supply in the region and the duration of the cooperation is limited to the lease period of the floating terminal.

As the region of the Baltics and Finland is quite strongly connected to Russia's gas supplies, almost half of the region's annual consumption would remain uncovered if they were cut off. Finland's annual gas consumption is about 23 terawatt-hours and Estonia's consumption is about 5 terawatt-hours.

Due to Russia's military aggression in Ukraine, the entire European Union has set itself the goal of giving up natural gas from Russia as soon as possible, but no later than the end of the decade.