HELSINKI, June 18 Finland and Estonia will have
to return to the drawing board with a joint gas terminal project
after the European Commission said a proposed two-terminal model
would not be eligible for subsidies, the Finnish government
Estonia and Finland proposed in February to build two new
liquefied natural gas (LNG) terminals on either side of the Gulf
of Finland and a pipeline connecting the two countries.
They had agreed to act jointly after competing for more than
a year over a project to build an LNG terminal.
"The European Commission did not approve the model proposed
to them," Esa Harmala, head of the energy department at
Finland's economy ministry said on Wednesday.
Asked whether this meant that the two-terminal model was
dead, he said that that was not necessarily the case.
The negotiations will continue over the next few months, the
ministry said in a statement.
A single LNG terminal would cost around 500 million euros
($680 million), according to analysts, and would provide an
alternative to gas supplies from Russia. A pipeline that would
allow Finland and Estonia to share imports would cost some 100
The European Union could fund up to 40 percent of a regional
terminal provided it serves the interests of more than one
country, and there are several Baltic states vying for funds.
Finland and the three Baltic states of Estonia, Latvia and
Lithuania consume about 10 billion cubic metres of gas per year,
all currently supplied by Russia's Gazprom.
The crisis in Ukraine, which has chilled relations between
Russia and Europe, has prompted EU governments to look at ways
to reduce their reliance on energy imports from Russia.
The Finnish/Estonia plan, however, was already in the works
before the crisis.
($1 = 0.7383 euros)
(Reporting by Sakari Suoninen; Editing by Susan Fenton)