Energy company Gasum told reporters today Gazprom Exportin has announced that Gasum’s natural gas supplies to Finland will be cut off on Saturday at 7 am.
The reason for the cut-off is that Finland has not agreed to pay for pipeline gas in rubles. However, according to long-term supply contracts, the payment currency is the euro. Gasum has submitted the contract to arbitration because the Russian party is violating the terms of the contract with its claim.
The Ministry of Employment and the Economy says that Finland is preparing to cut off Russian gas imports, but replacing it is not without problems.
The exact effects on gas availability and price will depend on the import routes used and the development of demand. In summer, demand is clearly lower than in winter.
According to the Finnish Gas Association, in 2019 there were about 4,000 detached houses heated by gas and about 1,100 terraced and multi-storey buildings. In addition, about 1,200 service or retail premises and 21 greenhouses were heated with natural gas.
According to the Ministry of Employment and the Economy, the direct gas needs of household customers can be met in all situations, as well as the gas needed for essential social services.
The Security of Supply Center is prepared to take care of the needs of protected customers, ie household customers connected to the gas network. In addition, the IGC is preparing to take care of the gas needs of social and health care facilities and the energy-critical food industry.
Energy companies can switch, and some have already switched to other fuels on market terms. The situation of gas-using industrial plants at the end of Russian imports varies.
Some of them have already changed fuel, some are moving to procure gas from the Baltics through the Balticconnector pipeline. According to the Ministry of Employment and the Economy, some companies would be forced to suspend their operations if pipeline gas were not available at all.
The chemical industry asked its member companies what the effects of a halt in gas supply would be for the companies.
In Finland, about one-fifth of chemical companies use natural gas, mainly as an energy source. According to the Gas Association’s statistics, industry in Finland uses just over 14 terawatt hours of natural gas annually. Of this, the chemical industry accounts for 7-8 terawatt hours.
Chemical companies were asked what the impact would be on production if gas supplies were to come to a complete halt.
According to the survey, significant production problems affect a group of companies that directly employs about 6,000 people and there would be an impact on a group of companies that employs about 12,000 people.
Interruptions in gas supplies would have a significant impact on about 72% and about 40% of gas-using chemical companies. The chemical industry directly employs about 34,000 people in Finland.
Managing Director of the Chemical Industry Association Mika Aalto says companies are preparing to cut off gas supplies, for example by introducing alternative fuels and looking for alternative routes for gas.
“If gas or alternative fuels are not available, companies may have to temporarily downsize their production processes,” says Aalto.
The greater effects will come after the summer, and the situation at that time will depend on how well natural gas is obtained through Balticconnector. However, according to the chemical industry, the gas demand for a typical winter can only be met by increasing LNG terminal capacity. In any case, prices are forecast to rise.
The Balticconnector transmission pipeline enables the import of substitute gas from the Baltics
The Balticconnector transmission pipeline between Finland and Estonia enables the import of substitute gas from the Baltics. Gas is also supplied to Finland as liquefied natural gas (LNG) via terminals in Tornio and Pori and through a terminal in Hamina in the autumn.
Gasum says that from tomorrow onwards it will supply natural gas to its customers via the Balticconnector interconnector from other sources during the summer season. The gas filling stations in the area of Gasum’s gas network are also operating normally.
CEO of Gasum Mika Wiljanen notes that it is very unfortunate that the supply of natural gas under our supply contract is now coming to an end.
“However, we have prepared for this situation carefully and if there are no disruptions in the gas transmission network, we will be able to supply gas to all our customers in the coming months,” says Wiljanen.
Floating LNG terminal for use next winter
Friday has been a busy day for gas.
Gasgrid Finland and American Excelerate Energy today signed a ten-year charter for the LNG terminal ship Exemplar.
The leasing of an LNG terminal vessel ensures the sufficiency of gas in Finland.
According to the Finnish government, the ship will ensure Finland’s security of supply and help meet Finland’s gas needs in the event of a cut in Russian pipeline gas imports.
The terminal ship is scheduled to be commissioned next winter and will be located in southern Finland. Necessary port structures will be built for the ship on the coasts of both Finland and Estonia. If they are completed in Estonia before Finland, the terminal ship can be temporarily located on the Estonian coast until the necessary infrastructure in Finland is completed.