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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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Estonia Strives to Shake off Soviet Energy Dependence

The three Soviet republics of Estonia, Latvia and Lithuania were always undigested morsels in the maw of the USSR.

Liberated by the 1919 Treaty of Versailles into independence, the three nations enjoyed freedom until the cynical Nazi-Soviet Nonaggression Pact of August 1939 assigned them to the Soviet sphere of influence between Hitler and Stalin.

Subsequently absorbed by the USSR, the states were “liberated’ by the Nazis in their 1941 Soviet invasion plan Operation Barbarossa, only to be “re-liberated” in 1944 by the Red Army.

They remained under Soviet thralldom until the late 1980s, when “reformist” Soviet General Secretary Mikhail Gorbachev’s twin policies of “glasnost” (“openness”) and perestroika (“reconstruction”) were taken seriously by citizens of the three republics, whose stroppiness helped encourage other Soviet citizens to end Lenin’s grand experience in coercing peoples to a better future in December 1991.

But, as the old pop song puts it, “breaking up is hard to do,” and Estonia, Lithuania and Latvia have remained tied to Russian energy exports even as they have joined both the European Union and the North Atlantic Treaty Alliance (NATO).

So, how to break the last (energy) umbilical cord to Moscow, subject to the whims of state-owned natural gas monopoly Gazprom?

In Estonia’s case, find other energy suppliers beyond the Russian Federation.

Tallinn’s conclusion apparently is, if we can’t pipeline it in, then let’s bring in Estonia’s natural gas needs via liquefied natural gas tankers through the Baltic.

To that end, since LNG needs a receiving port, Economic Affairs Minister Juhan Parts has initiated the transfer of land previously designated for national defense purposes, which currently includes the Tahkumae radar tower, to the Tallinna Sadam (Port of Tallinn, state-owned company operating five largest ports in Estonia) for construction of an LNG port.

The recipient?

Estonian national power grid operator Elering.

But the proposed LNG terminal is close by a coal receiving port.

No probelmo – as Elering's LNG project manager Janek Parkman explained, “There is already a wharf and LNG carriers will not disturb the operation of the coal terminal. Building a fully operational terminal will require some filling of the seabed because there are a number of small bays there."

Definitely an incipient poke in the eye to both Gazprom and newly reelected Russian Federation President Vladimir Vladimirovich Putin, as a former Soviet republic, a modest one at the that, not only joins Western (and incipiently anti-Russian) organizations like EU and NATO, but now seeks to sever one of the final remaining connections to the Rodina (“motherland’), Gazprom’s benign yet hugely profitable natural gas export regime to the petit Baltic republic.

The ingratitude, and after all Moscow did for them.

The mouse that roared.

The Estonian government, leapfrogging easier energy options, is not only advancing beyond being dependent on Gazprom exports but leapfrogged the “green revolution” in vogue amongst its more prosperous western EU comrades for renewable such as solar and wind by remaining committed to natural gas by diversifying its providers.

Even worse for Vladimir Vladimirovich, the EU will finance the construction of a large regional LNG terminal in the Baltic states to change the situation by which the Baltic countries are a so-called energy island with Russia's leading natural gas company Gazprom being the single supplier.

Finally, as regards waning Evil Empire influence over Eastern Europe, Poland’s GAZ-SYSTEM now supports the Business Case Analysis of Gas Interconnection Poland – Lithuania (GIPL), which would integrate Baltic States into EU gas market as well as provide access to the global LNG market via an LNG terminal in Swinoujusci.

Former Soviet republic Estonia, wretched little ingrate out the door is one thing, another is former Soviet East European satellite states, additional causes for Kremlin heartburn.

Why don’t they wanna continue to buy our gas?

Unfortunately for Russia, both Estonia and Poland have developed deep economic and military links to both the EU and NATO, so squeezing them to accept the Gazprom natgas status quo becomes more and more of a “pipedream,” however much Russia’s new president might fulminate.

For Eastern Europe’s new converts to the benefits of LNG, well, there only remains building the infrastructure and paying for the imports.

But given the uncertain future of former “clients” without options, its enough to make a Gazprom executive reach for the Stoly.

By. John C.K. Daly of Oilprice.com

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