Russia no longer Finland’s sole gas supplier

Russia is no longer Finland’s sole gas supplier, as stored natural gas has begun flowing to the country from Latvia through the new Balticconnector pipeline.

Some of the gas stored in Latvia itself comes from Russia, but there are also other sources including Norwegian supplies imported via Lithuania, though the exact percentages are not publicly available.

The stored gas will also reduce the likelihood that Finland will have to make quick and expensive purchases from Russia at times of increased demand.

“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,” economic analyst Maris Kirsons told AFP.

“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’s electricity and gas system operator Elering said in a statement that gas began flowing from Latvia’s underground storage facility in the central village of Incukalns to Finland via Estonia on January 1.

Much of Incukalns’s stored gas comes from Russia, but there are also other sources, including Latvian biogas producers and Lithuania’s floating LNG terminal in the port of Klaipeda, which buys the gas from countries including Norway, the Gulf States and the United States.

The Balticconnector project cost around 250 million euros ($279 million), with 75 percent of it covered by the European Union.

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

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 the LNG terminal in Klaipeda.

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