LNG for Finland stuck in Russia – Kommersant

According to Kommersant’s information, the Finnish Gasum has not been taking its LNG cargoes from NOVATEK’s Cryogas-Vysotsk project in the Baltic for a month now. Since May 2022, the Finnish company has refused pipeline gas from the Russian Federation, but continued to receive LNG from Vysotsk under a contract with Gazprom Export (it is a gas export agent under an agreement with NOVATEK). The parties do not comment on the reasons for the termination of Gasum supplies. According to analysts, the lack of LNG cargoes from the Russian Federation will not create difficulties for Finland, while Cryogas-Vysotsk’s main sales came from Finnish buyers.

Finnish Gasum has stopped taking its LNG shipments from NOVATEK’s Cryogas-Vysotsk project in the Leningrad Region, according to Kpler data. Thus, one of the two tankers owned by Gasum – Coral Energice – last called at the port of Vysotsk on April 24, from where it left unloaded (the last batch of LNG was taken out by a ship on April 12). The second Gasum tanker, Coral Energy, called at the port of Vysotsk for the last time on April 4. Prior to this, tankers took several cargoes every month. Two gas carriers Gasum transported 17.46 thousand and 14.2 thousand cubic meters of fuel, respectively.

The capacity of Cryogas-Vysotsk is 660 thousand tons of LNG per year. 51% in the project belongs to NOVATEK, 49% to Gazprombank.

Gazprom stopped pipeline gas supplies to Gasum on May 21, 2022, after Finland refused to accept the payment scheme for gas supplies in rubles introduced by the decree of the President of the Russian Federation. At the same time, Gasum continued to buy LNG from Vysotsk under a long-term contract with Gazprom Export – the latter is the gas export agent for NOVATEK, which, by law, does not have such a right in the case of Cryogas-Vysotsk. Vladimir Putin’s decree does not apply to LNG contracts, so the Finns continued to pay for supplies in euros. The volume and terms of this contract are unknown, but the obligations under it will be valid, as the Finnish company reported on March 21, “for many more years.” The contract was concluded on a take-or-pay basis, that is, it obliges the Finnish company to pay for the booked volumes, even if it does not pick them up.

Gasum and NOVATEK did not respond to Kommersant, while Gazprom declined to comment.

The head of NOVATEK, Leonid Mikhelson, confirmed at SPIEF 2022 that Gasum had replaced pipeline supplies with LNG: “Finland said that we would not buy from the pipe, but we would buy LNG. Officially said. The load is higher than the design capacity, because we sell everything we have” (quote from RIA Novosti).

In 2021, Gazprom supplied 1.49 billion cubic meters of pipeline gas to Finland, but gas occupies no more than 6% of Finland’s energy balance. After the cessation of supplies from Russia, Finland imports gas through the Balticconnector gas pipeline, which connects it with Estonia along the bottom of the Gulf of Finland. This gives the country access to LNG from Lithuania as well as gas stored in Latvia. Helsinki also launched a 5 bcm/y floating LNG regasification terminal at the port of Inkoo.

In recent months, LNG shipments from the Cryogas-Vysotsk terminal to Finland have been declining: in December 2022, Finnish consumers were supplied with 24 thousand tons (46% of all shipments), in March – 16 thousand tons (23%), in April – only 15 thousand tons (20%). Finnish companies, along with companies from Sweden and Belgium, are “anchor” importers for the terminal in Vysotsk, said Sergey Kondratiev from the Institute of Energy and Finance. According to him, the cessation of imports from Russia now will not create difficulties for Finland. “With weak demand and declining natural gas prices in the EU, Finnish companies can find the required volumes on the open market, even though Russia is a key LNG supplier,” he says.

In 2022, Finland imported 0.27 million tons of LNG, including 195 thousand tons from Vysotsk. At the same time, in 2022, gas demand in the country fell by 47% year-on-year, to 1.28 billion cubic meters, in the first quarter of 2023, consumption fell by 24% year-on-year, to 0.37 billion cubic meters.

Tatyana Dyatel