Finland To Abandon the Russia-Finland Natural Gas Pipeline After 50 Years

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Finland To Abandon the Russia-Finland Natural Gas Pipeline After 50 Years

Gas valve and the flag of Finland (© Shutterstock/max.ku)
Gas valve and the flag of Finland (© Shutterstock/max.ku)

Russian President Vladimir Putin's invasion of Ukraine continues to roil gas pipeline operations throughout Europe.  Late last week, Finland's state-owned energy group Gasum was informed by  Russia's Gazprom Export that natural gas supplies from Russia to Finland would be cut on Saturday at 04.00 GMT.

The gas pipeline from Russia recently accounted for about 66% to 75% of Finland’s supplies. Russian gas exports to Finland have been declining since 2018, when shipments were about 2.6 billion cubic meters. They had fallen by 39% of that in 202O.

The supply cut by Russia is slated to kick off market steering measures by the grid operator, meaning it may ration flows to users. Finland also has reserve fuel in storage, which can be fed into the network if pressure drops too low. Reduced supply is likely to further raise the price of the fuel.   Matti Vanhanen, the former Finnish Prime Minister and currently Speaker of Parliament, said that after 50 years of importing gas from its Russian neighbor, "the pipeline is unlikely to ever open again, referring to the two parallel Russia-Finland natural gas pipelines that were launched in 1974.

Gasum said it will still be able to supply natural gas to its customers from other sources through the Balticconnector pipeline, while its gas filling stations will continue in normal operation.

Russian behavior, particularly its wanton military aggression in Ukraine, has convinced Finland, et al., that importing any natural gas from Russia leaves it vulnerable to Kremlin manipulation. This is why the Finnish government announced on Friday that Gasgrid Finland and US company Excelerate Energy have signed a ten-year lease agreement for a liquefied natural gas (LNG) terminal vessel, Exemplar, and Finland hopes to complete the terminal facility on its southern coast before winter.

The storage and supply capacity of the vessel is sufficient for the gas needs of both Finland and Estonia, Gasgrid Finland said in a press release.

According to the Finnish government, the floating LNG terminal, or FSRU, will be located in southern Finland, but no specific location has been announced. The necessary port facilities will be built in both Finland and Estonia. If they are completed in Estonia before Finland, the terminal vessel can be temporarily berthed in Estonia until the necessary infrastructure is completed in Finland, the Finnish minister said.

The LNG terminal vessel coming to Finland is 291 meters long and 43 meters wide. It has a volume of about 151,000 cubic meters, which corresponds to about 68,000 tons of LNG when fully loaded. The amount means approximately 1,050 GWh of energy. LNG is delivered to the terminal by tankers from the global market, and the tankers are estimated to visit the terminal 2-3 times a month. Reloading of the vessel always takes about a day.

"With more than 5 billion cubic meters a year in regasification capacity, Exemplar (the vessel) can easily cover Finland and Estonia's combined gas consumption and have much more left over," Excelerate's Chief Executive Steven Kobos told reporters.

The project schedule will be specified in June. The total cost of the LNG terminal vessel project with the 10-year lease is estimated to be at 460 million euros, in addition to which there are separate costs associated with the volume of use.

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