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Estonia and Finland weigh gas pipeline

  • 2002-02-28
  • Kairi Kurm
TALLINN - The private gas utility Eesti Gaas is in preliminary talks with Finnish natural gas trader Gasum over construction of an underwater natural gas pipeline between Estonia and Finland which would reduce Estonian dependence on Russian gas.

News of the talks emerged during a visit to Tallinn by Norwegian Prime Minister Kjell Bondevik on Feb. 20.

Bondevik emphasized Norway's interest in the development of a Baltic Sea region energy network and in increasing Norwegian gas exports, according to the government's press office.

"It is too early to speculate about the possible location, shareholding or the productivity of the project, because it is just on the idea level," said Urmas Kuusik, an Eesti Gaas adviser.

Viability studies could begin next year if the exploratory talks prove positive, said Eesti Gaas's President Aarne Saar.

Construction would take about a year and begin in 2004 at the earliest, Antero Jannes, Gasum's managing director told the newspaper Kauppalehti.

The capacity of the pipeline would be about 1 billion cubic meters annually, which is the amount consumed by Estonia in a year.

Under a contract which expires in 2005 Estonia currently imports all of its gas supplies via a pipeline from Russia.

Eesti Gaas and Gasum have similar ownership structures. Gasum is a quarter owned by Fortum of Finland, a quarter by Russia's Gazprom, 24 percent by the Finnish state and 30 percent by Ruhrgas of Germany.

Privatized in 1997, 37 percent of Eesti Gaas belongs to Gazprom, 32 percent to Ruhrgas, 18 percent to Fortum and 9 percent to Latvia's Itera, a subsidiary of Russia's Itera.

In 2000 Eesti Gaas sold 825 cubic meters of natural gas and netted a 243 million kroon ($ 13.5 million) profit on a 948 million kroon turnover. Most of the heat for Estonia's district heating stations comes from natural gas.