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Consultants Booz & Company carried out a study at the request of the European Commission into the best location for a LNG terminal in the Baltic. The objective of the terminal is to reduce the dependence of the eastern Baltic countries on natural gas imports from Gazprom. The fact that they are almost completely reliant upon Russian imports gives the soviet state the power to charge high prices.
Finland has come out on top as the ideal location for the new terminal. The only problem is that Finland is currently tied in to a long term gas contract with Gazprom until 2025.
If the LNG terminal cannot be built in Finland then the next choice is Estonia, in the port of Paldiski, due to the fact that connecting the terminal to the local gas grid would be cheap and easy.
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The report states that “a Finnish terminal would bring the same benefits as a LNG terminal located in Estonia, both in terms of supply diversification and security of supply. Furthermore a LNG terminal in Finland has the advantage to be closer to the centre of biggest gas consumer in the region, namely Finland.”
The east Baltic countries consume about ten billion cubic metres a year of natural gas, with Finland accounting for five billion. The new terminal will have an initial capacity of four billion cubic metres, and is merely intended to offer an alternative to the Russian product in order to encourage lower prices.
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com