Fri, 14/09/2018 - 05:25
Current Issue 34
Integrating Finland into the European gas market
Herkko Plit, CEO and President of Baltic Connector OY, reveals how one of the EU’s flagship energy projects is set to change the regional status quo
Writer: Jonathan Dyble
Project Manager: Richard Thomas
“The EU gas market will be transformed, not only in reducing Russia’s position as an essential gas supplier in the EU, but also in expanding market aspirations – which is something that we are really hoping to see in the outcomes of the project,” says Herkko Plit, CEO and President of the EU-funded pipeline project, Balticconnector.
In a volatile geopolitical climate, enhancing regional energy security has become an increasingly pressing issue for the European Union.
In the aim of achieving this, the European Commission (EC) is attempting to merge key regional gas networks across the Europe, a goal that has led to the development of several key infrastructure projects.
One such project is Balticconnector.
With the Finnish government having introduced a new company, Baltic Connector Oy, to oversee its construction, the pipeline is expected to play a key role in remodelling the status quo in the energy market, both politically and economically.
Two decades in the making
“The story of Balticconnector started almost 20 years ago, when people began to discuss how we might better connect the Baltic region to other countries,” Plit explains. “In 2011–2012 these discussions really got boosted, largely after the European Commission (EC) announced that it was planning to help funding some of the most crucial infrastructure projects in Europe.
“As a result, the Balticconnector project, together with the creation of a new major energy terminal, began to become more of a reality.”
Since then, the Estonian and Finnish governments agreed an LNG terminal would be set up in Finland, with an offshore pipeline connecting the two countries’ gas networks to be implemented directly across the Baltic Sea. Later in 2015 with the change of the project promoter, the LNG terminal was left out and it was prioritized to focus on Balticconnector pipeline.
With a total cost of €250 million, the project has been divided into five segments that in total will see the construction of 153 kilometres of pipeline alongside two compression and metering stations; one in Inkoo, Finland and the other in Kersalu, Estonia.
Upon completion, it is estimated that the transmission capacity of the pipeline will be 7.2 million cubic feet, equating to 72 GWh per day, whilst the pipeline itself will allow gas to be transported bi-directionally according to market demand.
“By the summer of this year we had finished a detailed design of the project, had received the necessary permits and finalised all of our procurement plans,” Plit reveals. “Now we are fully in the construction phase of the project; a period that we expect to continue until the end of 2019, where after the gas can start operating.”
European gas market potential
Plit admits that the project is by no means the largest of its kind, however, he stresses that its strategic influence will be worth substantially more to the EU, not only in bolstering the continent’s energy security, but also in enhancing the gas market itself.
“Having set up Baltic Connector Oy in 2015 we quickly applied for funding from the EC’s Connecting Europe Facility initiative that was introduced to help finance major gas infrastructure projects across the EU,” Plit explains. “It immediately became clear that the project was critical for both the region and Europe, and so the EU agreed to fund 75 percent of the project.
“No other energy project in Europe before had received this level of funding.”
Balticconnector’s importance has been magnified from coinciding with two other pipeline projects that combined will play a key role in facilitating the levels of market integration that the EU is hoping to achieve.
The Gas Interconnection Poland-Lithuania (GIPL) project, partially funded by the Estonian government, will connect Poland’s and Lithuania’s gas networks, whilst the Baltic Pipe project will allow the transport of gas from Norway to the Danish and Polish markets.
Alongside existing gas infrastructure, these three key emerging projects will markedly improve the accessibility of natural gas between the Baltics and the rest of Europe, paving the way for a range of new possibilities.
“The importance of the Balticconnector project is much, much larger than its value would suggest, evident in the fact that the Commission President, Finnish and Estonian Prime Ministers were all present during the signing of the grand agreement with the EC,” Plit points.
“It’s really a flagship project for the EU.”
Considering the future
The trend in the global energy market has increasingly shifted towards renewables therefore guaranteeing longevity was paramount to Plit throughout the project’s planning phase.
“Some might consider natural gas to be a short-term solution, but we have ensured that this project will embody the future of regional energy transfers for the long term,” he says. “Whilst these gas pipelines have been constructed to carry phosphide gas, we have made certain that they can be repurposed to transport alternative fuels, such as biogas or hydrogen.
“Strategic infrastructure such as Balticconnector is going to be fundamental to our future. If we want to continue to have a competitive energy market, it is important that such infrastructure is prepared for long term changes in the market.”
This was just one of several considerations made by the Baltic Connector Company during its extensive design phase – something that Plit feels has been essential to the success of the project to date, forecasted to be finished both on time and on budget.
“Because of the project’s significance, not only to us but to the whole of Europe, it has been crucial that it has remained on schedule,” he says.
“Our implementation is really going well thus far, as we had promised the EC.
“We did our homework, we took the time to ensure our design plans were as adept and detailed as possible, and as a result I hope that by the end of our timeline we can say that there is an integrated Finnish and Baltic gas market that is connected to the EU,” Plit concludes.