Baltic LNG terminal accord likely in time for EU funding

Reuters/Oslo

Estonia and Finland are likely to agree on a site for a Baltic liquefied natural gas (LNG) import terminal later this year in time to obtain EU funding, Lithuania’s energy minister said yesterday.

The European Union has said it could fund the regional LNG terminal to help wean the three Baltic states and Finland off their total dependence on Russia gas imports but that the countries had to agree on the project among themselves.

The European Commission had set an initial deadline for an agreement by its summit next week.

“I’m not very optimistic from looking at what we have in front of us regarding the decision on localisation before the May 22 meeting, but I know that Estonia and Finland are engaged in very active discussions,” Lithuania Energy Minister Jaroslav Neverovic told Reuters as part of a series of interviews on the gas market.

They still have a few months to agree, said Neverovic, whose country is taking the EU’s rotating presidency in July.

“Our Baltic and Finnish colleagues share the notion that it will be quite a blow to lose such an important part of infrastructure if there is no agreement between the two countries,” Neverovic said.

Estonian Prime Minister Andrus Ansip told reporters yesterday the final deadline to agree on the site was end-June.

“If we do not reach an agreement by the end of June, then the current funding allocation will pass. The next opportunity for funding will be in 2016, but it may be that funding for this project will no longer be available,” Ansip said in Tallinn.

A study for the European Commission last year said Estonia and Finland would be the most suitable place to build the terminal, which is estimated to cost €400mn to 500mn ($643.1mn).

Without an agreement, the terminal can’t be included in the EU’s list of projects of common interest to obtain funding. which is expected to be formally announced in Vilnius at the beginning of November.

“Hopefully, by that time we will be able to say that we have agreed on all elements of gas infrastructure in the Baltic states and Finland,” Neverovic said.

Lithuania aims to have a separate, smaller LNG terminal up and running by end-2014 to help it negotiate lower prices with Russia’s Gazprom, currently its sole supplier. It is not asking for EU funding.

“Right now Lithuania pays one of the biggest, if not the biggest, price for gas in the EU ... and this is not acceptable,” Neverovic said.

“I’m sure that the alternative gas supply sources should be a very serious wake-up call to our partners,” he added, in a reference to Gazprom.

Neverovic said Lithuania expected to have an agreement to import LNG in place by the end of this year and that the US, benefiting from a boom in shale gas supplies, might become its LNG supplier.

“We look forward to the US government decision to allow LNG exports, and we believe that it might have a very positive impact for the global gas market, but also specifically in the Lithuanian case.”