Baltic pipeline opens to ease gas dependence on Russia

Riga

STORED natural gas has begun flowing to Finland from Latvia through the new Baltic connector pipeline in a bid to ease the region's dependence on Russian gas.

"The first quantities of natural gas on the common gas market between Estonia, Latvia and Finland flowed from Latvia to Finland via Estonia on Jan 1," Estonia's electricity and gas system operator Elering said on Friday in a statement.

Thanks to imports from Latvia's underground storage facility in the central village of Incukalns, Russian gas giant Gazprom will no longer be Finland's sole supplier.

"Russia is - and will be - the main source of natural gas consumed in the Baltic countries and Finland. But the use of Incukalns storage now gives Finland and Estonia more leverage against Gazprom, just like Latvia has always had," economy analyst Maris Kirsons said.

"Utility companies can buy gas at low prices, store it underground and then use it whenever demand rises, avoiding paying Russia high prices on the spot."

Estonia and Latvia's pipelines have already been connected for half a century.

The overall cost of the project was around 250 million euros (S$376.7 million), with 75 per cent of it covered by the European Union.

Negotiations on the possible accession of fellow Baltic state Lithuania to the system are ongoing.

Fees for transporting gas from one Baltic country to another have also been scrapped, meaning that gas can now flow throughout the single market comprising Estonia, Finland and Latvia with no extra charges beyond pipeline and storage costs.

"Launching the single market marks a major turning point for the energy industry, demonstrating that several countries are able to work together to strengthen their energy independence and work towards more efficient use of infrastructure on a transnational scale," said Zane Kotane, board chairwoman for Conexus, the company that manages Incukalns. "In addition, the Estonia-Finland interconnector... will put an end to Finland's isolation," she told public broadcaster LSM.

The Baltic states' heavy dependence on Russian gas was partly reduced in January 2015, when Lithuania broke the Russian monopoly on gas deliveries by launching its first floating LNG terminal in the port of Klaipeda.

Russia's 2014 annexation of Ukraine's Crimean peninsula prompted the EU to speed up its plans to cut dependence on Russian gas. AFP