* Lithuania, Latvia, Estonia push to diversify from Russia
* Governments want LNG terminal to supply non-Russian gas
* Lack of agreement on location, Finnish involvement
By Henning Gloystein and David Mardiste
TALLINN, Nov 14 Energy executives and officials
cast doubt on Wednesday on plans to build a liquefied natural
gas terminal for the EU's former-Soviet Baltic republics, part
of a push to make them less reliant on former master Russia.
All too familiar with Moscow's willingness to play power
politics with its oil and gas riches, Lithuania, Latvia and
Estonia are part of a raft of former communist states in eastern
Europe working hard to find alternative sources of supply.
But officials say they lack the drive to cooperate fully
with one another, undermining larger scale projects which
require a bigger funding and consumer base than each of their
small economies provides independently.
"The Baltic region lacks clarity of future development and
this needs to change as we require coordination to safeguard
supplies," Dins Merirands, Director at the Energy Department of
Latvia's Ministry of Economics, told a conference in the
Estonian capital Tallinn.
Just along the coast, Poland is launching construction of
its own LNG terminal, expected to start importing gas from Qatar
in 2014 after it secured the last required piece of funding last
month. But the Poles have a consumer base of some 38 million,
while the three Baltic states of Estonia, Latvia and Lithuania
have respective populations of 1.3, 2.2 and 3.2 million.
The three rely almost exclusively on Russian imports for the
gas which covers around 50 percent of their power generation,
according to Estonia's electricity grid operator Elering.
"If we only have one gas supplier there is no point in
speaking of secure supply and there is no point in investing in
gas-fired power generation," said Elering's CEO Taavi Veskimagi.
The Balts are waiting for a report from the European
Commission on where best to place a 4 billion cubic metres (bcm)
LNG terminal for the region. One possibility is that it would
actually be in Finland, with a pipeline from the Nordic state to
the Baltic countries.
But the EU will only help fund the project if there is
agreement between the countries involved and the three
governments still seem at odds on whether they need to broaden
the project out to include Finland in a common infrastructure.
"The most important argument for cooperation is economics of
scale to create a common gas infrastructure," said Ando
Leppiman, Deputy Secretary General at Estonia's Economy
Lithuania is still in the throes of post-election political
wrangling to secure a new government and its officials voiced
more concern regarding joint developments. Latvia has said the
port in its capital Riga would be the best location.
"The upcoming government supports the LNG project as an
alternative source of gas, said Birute Vesaite, a member of the
Social Democratic Party who won the Lithuanian elections.
"But the project is not transparent in terms of funding.
Additionally, the existing pipeline highway is too small to
support the 4 bcm LNG terminal."
She also said that the gas purchase obligations currently
being discussed with the LNG terminal developers were a matter
Like most European countries, the Baltics have a flat gas
demand outlook, so they have to tackle the problem of having
to diversify supplies without the need to receive more gas.
A Finnish government official said at the same conference
that Finland supported the LNG terminal but that the country did
not seek to increase the share of gas in its energy mix, which
currently stands around 10 percent of primary energy demand,
mostly used for power generation and by industrial companies.
"No one (in Finland) is considering to increase their share
in gas because it is not competitive, but we also don't want to
reduce our gas use, ... and although Russia has been a very
reliable supplier, that is why we are interested in a Baltic LNG
terminal," said Esa Harmala, Director General of the Energy
Department at Finland's Economy Ministry.
Electricity generation from gas is less profitable than
coal-fired power production because gas prices have remained
higher when compared to coal.
(Editing by Patrick Graham)