Balticconnector gets the green light while Nord Stream2 gets a red one

World Bank, CC BY-NC-ND

Finland-Estonia Gas pipeline allocated EU funding, while Nord Stream2 falls out of Polish anti-monopoly agency.

The EU confirmed that the Balticconnector pipeline will be given the necessary funds for realisation. In the continuing efforts of the region top wean themselves off Russian Gas. The efforts of Gazprom and its Western partners received a blow in August and it withdrew its application from the Polish government’s anti-monopolies office.

The Balticconnector pipeline is the latest stage in the attempt to have an integrated and independent energy supply in the Eastern Baltic, as the region attempts to reduce its dependence on Russian gas supplies.

Initial funds of EUR5.4m to cover studies were signed off between the EU and the co-promoters Elering Sa and Baltic connector Oy in December 2015 . The level of support for the venture stands at EUR187.5m of the 250m needed or 75 per cent. The project has been classed by the EU as a project of common interest.

July’s agreement enables the region to improve its security supplies, especially when co-ordinated with the Lithuanian gas interconnector project with Poland and the former’s opening of its LNG terminal in Klaipeda.

The pipeline itself consists of three sections. The offshore section is 82m long, linking Paldiski in Estonia to Inkoo in Finland. The Estonian section will be 47 km long and the Finnish 22km. The project will have a capacity to handle 7.2m cubic metres of gas daily in both directions.

Surveying is scheduled to take place this year and in 2017; tenders for suppliers and works between now and 2018. Construction will take place between 2018 and 2019 with completion in December. It is expected to be to be functional by 2020. The missing link with Latvia, the interconnector, will be improved between 2016 and 2019.

“Balticconnector will be the first gas pipeline to connect Estonia and Finland, and will significantly increase energy security in the eastern Baltic Sea region,” said Ollie Rehn, the Finnish Minister of Economic affairs in the publication “Baltic Rim Economies”.

“The target is to keep gas as part of our energy mix. Although gas produces carbon emissions, its emissions are about 40 per cent less than those of coal. Thus gas is as appropriate bridge from coal to a carbon-free society,” he added

It is unclear just how much a threat the proposed Nord Stream2 project poses to the Finnish- Estonian venture. The Nord Stream2 undertaking has been the subject of vociferous opposition form the countries of the eastern Baltic region, which argue that it runs contrary to the integrated energy policy aims of the EU. Even though it is a venture between Gazprom and five Western companies in partnership, it is perceived to be a Russo-German undertaking, one that undermines the energy and security policy. Poland has been among the chief critics of the deal.

Events took a turn when on August 12th Gazprom withdrew its submission for approval from the Polish anti-monopoly institution (Urząd Ochrony Konkurencji i Konsumentów, UOKiK) which task was to evaluate the venture and its impact on the Polish energy market.

The devil in the detail

The portal reported that the bone of contention seemed to be Gazprom’s proposed change in the amount of gas delivered in the event of any shortages. In essence, German resources and gas storage facilities belonging to the company would have first priority. This measure was proposed on August 9th but seemed to have been met with opposition from UOKiK.

Gazprom’s western partners withdrew “to contemplate alternative ways to contribute to it (the European energy system),” as they stated in a press release.

This leaves Gazprom including out on a limb for now but the company said in the same statement that Nord Stream2 schedule will be unaffected. Nord Stream 1 was completed also in the teeth of regional opposition.

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