Balticconnector gets Go-Ahead - improving energy security or waste of subsidies?

The European Commission announced on Friday 21 October that a first bi-directional gas pipeline will be built between Finland and Estonia. According to the EU, the offshore gas-pipeline between
the two states will end `gas isolation` of Finland by connecting it to the continental European network and increasing the security of gas supply and solidarity in the region, see:

Although the pipeline will be build by the Estonian TSO Elering, the EU is footing 75 per cent  of the bill, because the project would not be commercially viable without massive EU support. The money is coming from the EU`s `Connecting Europe Facility Energy (CEF-Energy),  According to  the EU, Finland is going to profit the most, as its current `gas isolation` from the European market would be tackled and its energy security improved:

This line of reasoning, however, lends itself to controversy. Given the fact that Estonia is still totally dependent on Russian imports to meet its demand for natural gas the claim that energy security in the region will get a substantial boost appears to be questionable. Even though Estonia recently underwent efforts to diversify its gas supply-structure by buying gas from neighbouring Lithuania, the Ministry of Foreign Affairs of the Republic of Estonia concedes that Lithuania itself is importing the gas from Russia, see: . However, as a bottom line Finland is gaining access to the wider European gas market, but whether or not this advantage justifies a €187 million grant for works (75 per cent of total costs of the pipeline) by the EU remains to be seen. The Press release of the EU is reproduced below:

Investing in infrastructure that unites: first gas interconnector between Finland and Estonia ends energy isolation

Brussels, 21 October 2016
A first gas interconnector between Finland and Estonia will end the long lasting gas isolation of Finland and help, boosting security of supply and bringing an economic lift to the region.
European Commission President Jean-Claude Juncker, the Prime Minister of Estonia Taavi Rõivas and the Prime Minister of Finland Juha Sipilä have today witnessed the signing of a €187 million investment in the Balticconnector – the first gas pipeline connecting Finland and Estonia. This gas interconnector will end the energy isolation of Finland which is largely dependent on a single supplier. When the gas starts flowing by 2020, this project will unite the Eastern Baltic Sea region with the rest of the EU energy market.
President Juncker welcomed the investment: "Today's signature shows that the European Union delivers and unites. It is the result of close cooperation and a proof of true European solidarity. We are doing more than linking gas systems of two countries. We are bringing people and Member States in the region closer together by building a pipeline that unites European countries. As part of the Energy Union, we are building missing energy links, uniting markets, improving security of supply and ending the energy isolation of Member States."
Prime Minister of Estonia Taavi Rõivas said: "Balticconnector signifies a key development for Nordic-Baltic energy market integration, for region's security and diversity of supply and for consumer benefit. Regional co-operation and EU's contribution allows for a change from entirely closed to one of the most diversified and open regional energy markets in the Union with further prospects in upcoming years" and Prime Minister of Finland Juha Sipilä added: "Balticconnector is an important milestone in helping to complete EU wide energy market and improving the security of supply in Baltic Sea region".
As part of the EU's Energy Union strategy, the EU is committed to building missing energy infrastructure links and ensuring that every Member State has access to at least three different sources of gas. Integrating the Baltic Sea region with the rest of the EU is a priority for the Commission.
The Balticconnector pipeline will consist of three sections: 22 km Finnish onshore, 80 km offshore and 50 km Estonian onshore. It enables the transport of 7.2 million cubic metres of gas per day with flows running in both directions. Alongside the Gas Interconnector Poland–Lithuania (GIPL), it will contribute to increasing energy security and solidarity in the region.

Currently, Finland is largely dependent on gas flows from a single supplier. And until recently, the three Baltic States also had to rely on gas imports from a single gas source. When completed, the Balticconnector and the gas pipeline between Poland and Lithuania, will allow Finland and the Baltic States to diversify their gas sources and routes, safeguarding them against possible supply disruptions in the future.
Till 2020 a total of €5.35 billion will be invested in European priority projects under the Connecting Europe Facility (CEF). When completed, the projects will enhance security of supply and contribute to market integration. The grant was awarded under Connecting Europe and covers 75% of the construction costs, the maximum co-financing level permitted.


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