Bottlenecks to curb use of Baltic FSRU

Limited gas transmission capacity between Finland and Estonia will make it difficult for the region to make full use of a planned floating storage and regasification unit (FSRU).

The 150,900m³ Exemplar, the vessel leased for the project, will be moored in either Finland or Estonia, with port facilities and injection points to be built at Finland's Inkoo and Estonia's Paldiski ports. The Estonian economy ministry expects infrastructure in Paldiski to be ready by the end of November, while Finnish system operator Gasgrid said that the FSRU should be commissioned by the end of the year at the latest.

The Exemplar will have a maximum LNG sendout capacity of 140 GWh/d, while Gasgrid is targeting a utilisation rate of 35 TWh/yr. But limited transport capacity between Estonia and Finland on the Balticconnector will prevent full use of this capacity, and means that it would be difficult to meet peak demand in the two countries regardless of where the FSRU is moored.

In normal operating conditions, entry capacity to the transmission network from the FSRU may be in a range of 100-140 GWh/d irrespective of the FSRU's location, Gasgrid said. The terminal is intended to provide baseload supply and is not suitable for peak load or storage for longer periods, nor will it be used for bunkering or truck loading, it said.

If the FSRU is moored in Finland, demand for sendout would be limited to the country's domestic consumption and the Balticconnector's capacity towards Estonia. Finnish consumption was typically about 40-50 GWh/d in the 2021-22 winter and only 20-30 GWh/d in the second quarter. And the Balticconnector is scheduled to have a 47 GWh/d capacity to Estonia this winter — though once the terminal is commissioned, this will enable higher pressure, which should increase the Balticconnector's capacity. The line's design capacity in this direction is 80 GWh/d.

Capacity limitations on the Balticconnector to Finland are even more restrictive, meaning that if the FSRU was moored in Estonia, Finland would not even be able to meet half of its demand of about 150 GWh/d during peak periods.

There will also be a "special commissioning phase", although the exact rules during this period remain undecided, Gasgrid said. It could involve only offering spot capacity, and annual capacity may not be available until it can be offered for a full gas year, Gasgrid told Argus. There will be no limit on how much of the terminal's capacity can be booked by a single user, Gasgrid said.

Bottlenecks limiting use of LNG import capacity could require Finland and the Baltics to cut their consumption, assuming Finland opts against trying to restart Russian imports — which halted in late May after Finnish importer Gasum refused to transition to payments in roubles.

Finnish demand already fell year on year by as much as 50pc in January-June, Gasgrid said. That said, at least some of this was because of a mild winter reducing heating demand. Further demand cuts may be necessary for Finland and Estonia to be able to meet peak demand without resuming imports from Russia.

By Brendan A'Hearn