* Estonia best alternative for Baltic states terminal
* Region wants to cut dependence on Russian gas
OSLO Nov 23 Finland is a strong contender for
the location of a new liquefied natural gas (LNG) terminal to
help eastern Baltic region countries cut dependence on gas
imports from Russia, a study for the European Commission showed
The Commission asked for the study to establish the best
site for a regional LNG terminal, which hopes to win European
Union funding, after the Baltic states of Estonia, Latvia and
Lithuania failed to come to an agreement.
The study by consultants Booz & Company said a terminal in
Finland would fit a strategic goal set by the Commission, the
bloc's executive, for the Baltic region, which consumes about 10
billion cubic metres (bcm) a year of gas, half of which is taken
"It (a Finnish terminal) would bring the same benefits as a
LNG terminal located in Estonia, both in terms of supply
diversification and security of supply," the report said.
"Furthermore a LNG terminal in Finland has the advantage to
be closer to the centre of biggest gas consumer in the region,
namely Finland," it added.
The report said a terminal should have a capacity of about 4
bcm to cover demand and act as a price alternative and cap to
Russian gas imports.
Finland's gas grid operator Gasum confirmed last week that
it wanted to build an LNG import terminal on its southern coast,
connected to Estonia through a gas pipeline.
One possible issue is that Finland is tied into long-term
gas contracts with Russia's gas export monopoly Gazprom
"It is unrealistic to expect the real need for LNG in
Finland before the maturity of existing take-or-pay contracts in
2025," the study said.
ESTONIA AN ALTERNATIVE
Should the terminal not go to Finland, Booz said Estonia's
port of Paldiski would be the best option because the cost for
connecting the terminal to the gas grid here would be low.
The study said that links to Finland and Poland from here,
along with an upgrade to connect the terminal to the remaining
Baltic states, would cost 1.3 billion euros ($1.68 billion).
A 4 bcm per year terminal in Paldiski would cost 501 million
euros ($649 million), including 38 million euros for a link to
Finland. If there is a need to upgrade the capacity to 8 bcm, it
would cost an additional 140 million euro.
The study gave no cost estimate for a Finnish terminal.
The study said gas consumption could rise in the Baltic
states and Finland to 16 bcm a year, if the LNG terminal and
interconnections are built to diversify supply and cut gas
costs. At present the Baltic states pay high costs for gas
imports due to their almost total reliance on Russian supplies.
Lithuania, the southernmost Baltic state, has decided to
build a smaller, floating import terminal with capacity of 2-3
bcm at Klaipeda port, without seeking EU funds.
It also plans to build a gas interconnection to Poland,
which is also planning to start importing LNG in 2014.
($1 = 0.7761 euros)
(Reporting by Nerijus Adomaitis; Editing by Henning Gloystein
and Anthony Barker)