Hoping to reduce reliance on Gazprom, Estonian companies eye Lithuanian gas

2014-12-10
from Will Mawhood and wire reports, TALLINN

Klaipeda port, where the recently-opened LNG terminal is located. Photo: Creative Commons

The Estonian company Baltic Energy Partners has started buying gas from Lithuania. This is a symbolic step, as generally Estonia depends on the Russian company Gazprom for its gas and has never bought gas from Lithuania before, Public Broadcasting reports.

The electricity and gas sales company Baltic Energy Partners confirmed the deal to the public television station ETV, but explained that, for now, these are test purchases, in order to understand whether gas trade between Estonia and Lithuania is feasible.

So far things have gone well: in total 100,000 cubic metres of gas has been bought in the last week - although, considering that Estonia's annual consumption of gas is nearly 700 million cubic metres, this is not an especially significant amount.

Traditionally, Estonia and Lithuania have moderately strong trade links: in 2013, Lithuania was Estonia's fifth-biggest import partner; while Estonia was Lithuania's tenth-biggest import partners, behind countries including Russia, Latvia, Sweden and Belarus.

How important Lithuania will be as a provider of gas to Estonia depends largely on whether the floating LNG terminal in Klaipeda, opened at the end of October, can compete with Gazprom in terms of price.

"We do not yet know if the price will become more or less favourable in the future. Certainly, LNG provides some kind of price cap in this region, but its competitiveness will be shown in time, because prices change all the time, and whether the LNG is competitive or not depends on the state of the market," explained Marko Allikson, a board member at Baltic Energy Partners.

Other companies are also eyeing Lithuanian gas: the public electricity grid Elering, which uses gas in its emergency power stations, has confirmed that it will welcome Lithuanian gas providers to its procurements.

In October, a spokesperson for Günther Oettinger, the European Commission for Energy, warned that Estonia is the EU member state most vulnerable to a prolonged stoppage of gas from Russia. She claimed that, in this situation, Estonia would run out of gas within four or five days.