Gas revolution from Finnish perspective Herkko Plit Deputy Director General MEE Energy Department Chairman of the Board of Baltic Connector Oy
Total energy consumption 2013 (primary energy) Wood fuels 25 % Hydro and wind power 3 % Other 4 % Net imports of electricity 4 % Peat 4 % Natural gas 8 % Coal 11 % Oil 23 % Source: Statistics Finland Nuclear energy 18 %
Electricity Consumption 2015 (82.5 TWh) Industry total 47 % Metal industry 10% Chemical industry 8 % Other industry 5% Housing and agriculture 23 % Other consumption total 50 % Forest industry 24 % Losses 3 % Services and building 27 % Source: Finnish Energy Industry 8.2.2016 3
Finnish Gas Market One single supplier of gas: Gazprom One substantial gas company: Gasum Gas consumption has decreased over the last years In 2014: 29,3 TWh; 1-11/2015 23,8 TWh Taxation, economic downturn, mild winters and decrease of gas usage in energy production Derogation from EU regulation on developing gas legislation according to the EU internal markets in force Target: keep gas as part of Finnish energy mix and increase security of supply and enhance gas market development More evolution than revolution?
Needed changes and target in the gas market - gas market legislation Elementary change due to weakened competivity of pipe gas in the energy markets Especially in energy production natural gas and other fuels are competing with each other Natural gas consumption has decreased by one third during 2010 s Create opportunities for developing LNG-infrastructure and utilization of biogas Create opportunities for Finland to be part of EU internal gas market and connecting Finland to the Baltic and central-europe gas market Create opportunities to diversify natural gas supply sources and to improve the security of supply PM Juha Sipilä s Government Programme: Gas market legislation proposal includes actions that are connected to the Government peak projects Strengthening of competitiveness by improving opportunities for entrenepeurship Simplifying legislative base
LNG-infrastructure
LNG terminal infrastructure Objective was to create a network of LNG terminals in Finland Chicken and egg problem in maritime transportation Common objectives: 1. Environmental protection Maritime and heavy transportation Industry/energy production 2. Security of supply and increase the competition in fuel markets LNG terminals dont replace pipe gas, they create new opportunities for use of gas
LNG terminal infrastructure 4 projects received investment aid from MEE Total investments ~315-350 M + ships, bunkering, distribution, etc. Granted aid amount ~93 M
Tornio Manga LNG Oy Location: Tornio Capacity 50 000 m3 Investment ~110 M Ownership: Outokumpu 45 % Skangas 25 % SSAB 25 % EPV 5 % Source: Manga LNG Oy
Tornio Manga LNG Oy Status 01/2016 Investment aid 09/2014 Start of construction works 01/2015 Completion of the terminal 08/2017 Start of LNG deliveries 02/2018 Source: Manga LNG Oy
Pori Skangas Oy Location: Pori (Tahkoluoto) Capacity 30 000 m3 Investment ~81 M Ownership: Skangas Oy (Gasum FI, Lyse NO) Source: Skangas Oy
Pori Skangas Oy Status 01/2016 Investment aid 09/2014 Final investment decision 09/2014 Under construction Completion of the terminal 09/2016 Source: Skangas Oy Source: Skangas Oy
Hamina Haminan Energia Oy Location: Hamina Capacity 30 000 m3 Investment ~92 M Ownership (Hamina LNG Oy): Haminan Energia Oy Alexela Varahalduse AS Status 01/2016 Investment aid 12/2014 COM approval 02/2016 Investment decision 02/2016 Completion of the terminal 2018 Source: Haminan Energia Oy
Rauma Oy Aga Ab Investment aid 09/2014 Location: Rauma Final investment decision has not been made Capacity: 10 000 m3 Investment ~30 M Source: Oy Aga Ab
Balticconnector Project
Aim of Balticconnector pipeline Increase security of supply Diversification of supply sources Market development More competition in the gas market Increased demand as a result
Benefits from the Balticconnector Additional supply source for Finland from Central Europe and vice versa Using Incukalns as seasonal storage, peak price shaving Cross-border balancing services Increased gas market; Baltics and Finland one entry exit area Price convergence in the region Possibility to enhance biogas markets Enhance Power to Gas potential
Project Developers Baltic Connector OY Baltic Conncector Oy is a state owned company in Finland. The company was set up in 2015 to implement the Finnish part for the Balticconnector pipeline project. Web: www.balticconnector.fi Elering Gaas AS Elering Gaas AS is a state owned company in Estonia providing the gas transmission service in Estonia. The company is responsible for transporting natural gas from the Estonian border through the transmission network to the agreed connection points. Elering Gaas AS and Elering AS will merge in the beginning of 2016. Web: gaas.elering.ee
Balticconnector connects the Baltic and Finnish gas transmission networks Increases security of supply Creates opportunities for market growth and makes way for alternative sources (LNG & bio gas) Connects the Finnish energy island with the Baltics and through the GIPL to the whole Europe
Balticconnector connects the Baltic and Finnish gas transmission networks Bidirectional flow enables to cover all the Estonian demand and about one third of Finnish peak demand. Enables gas transmission from Finland to the Baltic gas market and vice-versa. Enables for all the regions market participants utilize the storage capacities in underground storages. Offshore pipeline length ca 80 km Finland: CS + onshore pipeline ca 20 km Estonia: CS + onshore pipeline ca 50 km
Balticconnector current status Offshore Licensing in Estonia EIA procedure ongoing Superficies license procedure ongoing Licensing in Finland EIA procedure completed Front-end Engineering Design ongoing (FEED) Onshore Finland EIA completed Onshore Estonia Kersalu CS detailed planning and EIA completed Kiili-Kersalu pipeline EIA and planning completed
Balticconnector needs EU support Balticconnector important for EU energy strategy to create diversified gas source Project would not be commercially viable without substantial EU support Agreement for grants on studies signed with Commission on December 2015 Grant for works application in April 2016 Project overall cost estimate 250 M
Project schedule EIA process in Finland ended in Q4 2015 EIA process in Estonia will end Q1 2016 FEED started in autumn 2015 and ends March 2016 Final route survey and investigations in the second half of 2016 FID readiness 3 rd Quarter of 2016 Detailed design starts autumn 2016 All necessary permits for offshore part latest 2018 Construction will start immediately after receiving all the needed permits and FID Pipeline ready in the end of 2019 Pipeline life time designed for 50 years
Construction
Thank You herkko.plit@tem.fi Twitter: @HerkkoPlit