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REFILE-Finland, Estonia postpone LNG plants plan, stick with Russian supply
October 1, 2014 / 4:18 PM / 3 years ago

REFILE-Finland, Estonia postpone LNG plants plan, stick with Russian supply

(Changes dateline to Helsinki)

HELSINKI, Oct 1 (Reuters) - Plans to build a regional liquefied natural gas (LNG) import terminal in Finland will be postponed indefinitely, officials at the country’s economy ministry said on Wednesday.

That means Russia will remain Finland’s sole natural gas supplier, at time when others in the European Union are seeking to cut that reliance over the supply uncertainty created by the crisis in Ukraine.

“It is regrettable that... the regional LNG solution will be postponed,” Esa Harmala, senior official at Finland’s economy ministry told Reuters.

Finland and Estonia have been negotiating a plan with the European Commission to building two separate LNG terminals, connected by a pipeline across the Gulf of Finland.

Estonian company Alexela Energy also said plans for developing an LNG terminal in the Baltic state will be postponed, Baltic news agency BNS reported.

Harmala said the European Commission was still keen in supporting a gas pipeline connection between Finland and Estonia.

Finnish gas utility Gasum said in a statement on Monday, the partners have failed to agree on a commercially viable solution, given the limits of available EU’s support.

Gasum, which is 31 percent owned by Finnish utility Fortum and 25 percent by Russian gas supplier Gazprom , said it was still keen to develop its own LNG terminal, but its capacity, size of investments and construction terms would have to be revised.

“It is impossible to give any timeline now... We need to look at the market again and to make further studies,” Johanna Lamminen, Gasum’s chief executive, told Reuters.

Gasum has planned to build an LNG terminal in Inkoo, southern Finland, with a capacity to supply 1-2 billion cubic metres (bcm) of gas per year starting from 2019.

It imported 3.1 bcm of gas from Russia in 2013.

While the Ukraine conflict has provoked the worst crisis in East-West relations since the Cold War and deepened fears over possible disruptions of Russian gas supplies to Europe, Lamminen said she was not concerned.

“Russia has been delivering gas to Finland for the last 40 years, and there have been no problems... We are not concerned about that,” she said. (Reporting by Nerijus Adomaitis and Jussi Rosendahl, editing by William Hardy)

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