Estonia opts 'in principle' to halt all Russian gas imports by end 2022

The Estonian government has decided, in principle, to cease all imports of Russian gas before the end of the year, it said April 7.

It said that to achieve that aim it would need to deploy a floating LNG import terminal and storage facility at Paldiski by the autumn and acquire some 1 TWh of gas to be stored in Latvia.

It follows an announcement by fellow Baltic state Lithuania on April 2 that it had stopped all gas imports from Russia, while Latvia said the same day there had been no flows from Russia since the start of April.

"We must stop buying gas from [Russian President Vladimir] Putin's regime as soon as we can, since they are using the revenue from sales of it to fund their war against Ukraine," Estonian Prime Minister Kaja Kallas said in a statement.

"We have decided to increase our national gas supply and to establish a facility in Paldiski for the storage of LNG so that a floating terminal can be taken into use there from autumn," Kallas said.

"This represents an opportunity not only for Estonia, but for our region more widely, to head into winter without any dependence on Russian gas," she said.

Gas use across the three Baltic states is small, with Estonia's demand currently around just 5 TWh/year (0.5 Bcm/year). Lithuania's consumption in 2021 was around 2.3 Bcm, while Latvia's demand is estimated at some 1.5 Bcm/year.

The Estonian government said it supported an economy ministry proposal for gas grid operator Elering to organize the lease of an FSRU to be temporarily deployed at Paldiski.

In the longer-term, the FSRU can be deployed in Finland, it said.

"The ministry must now submit to the government a draft amendment to the Natural Gas Act covering solutions to gas supply emergencies and approval of the tariffs for the use of the LNG terminal," the government said.

In order to further mitigate the risks associated with ceasing imports of Russian gas, a decision was also taken to acquire up to 1 TWh of gas -- approximately 20% of Estonia's annual gas consumption -- via storage agency Eesti Varude Keskus.

"This will be able to be sold to all market participants in the event of supply disruptions," the government said. "The gas is planned to be stored in the Incukalns site in Latvia," it said.

'Moral compass'

Kallas said the Estonian government's aim was to favor gas produced from LNG in bolstering its supplies. "What we are very much hoping to see from gas sellers is that their moral compass is pointing in the right direction in this regard," she said.

"Moreover, our position in principle is that any LNG ship that reaches Paldiski should not be carrying Russian gas."

Economy minister Taavi Aas said the decisions taken April 7 were significant for the entire region.

"Working with Finland, we will be taking a floating terminal into use that will guarantee that both of our countries are supplied with the gas they need going into next winter," Aas said.

"We are in a unique position in the region here in Estonia in that we have the ability to set up an LNG floating terminal by this coming autumn. The pipeline will be constructed by Elering and the hauling quay by Alexela, the project for which has been in development for quite some time," he said.

The floating terminal in Paldiski is, in regional terms, a temporary solution so as to ensure the necessary supply of gas as quickly as possible, the government said.

In the future, until the end of the lease period, the terminal will mainly be located in Finland, it said.

Estonia and Finland are linked by the Balticconnector pipeline, which began operations at the start of 2020.