January 17, 2014 / 10:22 AM / 4 years ago

Estonia to Finland: let's both both build LNG terminals

HELSINKI, Jan 17 (Reuters) - Estonia’s economy minister proposed to Finland that the two countries, which have been competing over which will host a new liquefied natural gas (LNG) terminal, compromise by building one each, Finnish daily Kauppalehti reported on Friday.

Economy Minister Juhan Parts suggested that both sites be big enough to handle offloading LNG ships, according to the report.

Parts also proposed they could manage the extra costs by delaying planned construction of an undersea gas pipeline connecting the two countries by five years, the report said.

Analysts, however, say that the region’s gas demand only warrants one LNG import terminal - expensive plants both in terms of construction costs and gas import prices.

A single LNG terminal is estimated to cost around 500 million euros ($680 million) and provide an alternative to gas supplies from Russia. A pipeline that would allow Finland and Estonia to share the imports would cost around 100 million euros.

The European Union (EU) could fund up to 40 percent of the cost of a regional terminal provided it serves the interests of more than one country, and there are several Baltic Sea states that are vying for funds.

The EU is expected to announce a winner next June, and a study last November showed that Finland would be a strong contender.

Lithuania, the biggest Baltic state, plans to start importing LNG in 2015 through a floating terminal.

Finland and the three ex-Soviet Baltic states of Estonia, Latvia and Lithuania consume about 10 billion cubic metres of gas per year, all of which is currently supplied by Russia’s Gazprom. ($1 = 0.7352 euros) (Reporting by Ritsuko Ando, editing by Nerijus Adomaitis and William Hardy)

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