Finland OKs $168 million in funding for LNG capacity expansion

Finland has announced it will finance expansion of its liquefied natural gas capacity as Brussels remains undecided on whether to locate major new LNG terminal there.

The Finnish Ministry of Employment and the Economy announced Wednesday it is setting aside $168 million over two years to help finance several planned smaller-sized LNG terminals along the coastline, each with a capacity of between 50,000-70,000 cubic meters each.

The facilities are considered essential infrastructure for the conversion of Finland's commercial and passenger vessel fleet to LNG-powered engines in the wake of new EU rules demanding reductions of sulfur emissions on the Baltic Sea, which enters into force at the beginning of 2015.

The economy ministry said in a statement the building of the smaller LNG terminals will enable Finland's seagoing vessels to remain afloat with cleaner-burning LNG fuel, and facilitate imports of natural gas to areas of the country outside its existing gas network.

Establishing new sources of LNG, it said, "increases energy supply diversity and delivery reliability while reducing emissions, especially in industries in which other fossil fuels are used as energy sources."

Also, it creates a competing supply of gas in Finland, "which will make the gas market function better while making gas prices more competitive."

One project that could benefit has been proposed in the Tornio region, 575 miles north of Helsinki at the northern tip of the Gulf of Bothnia, where steel manufacturer Outokumpu is seeking to build a $150 million LNG terminal.

Basic engineering on the project has been completed with an environmental assessment under way.

The government is working on a "national action plan" to cope with a stringent new EU directive calling for big reductions in sulfur emissions from Baltic Sea shipping beginning in 2015, which Helsinki says will cost Finnish industry as much as $750 million per year to comply with.

Under the new directive, after 2015 the fuel sulfur content for any ship plying the Baltic Sea must not exceed 0.10 percent or its exhaust gas must be cleaned to that same level.

Health officials have estimated maritime emissions cause 50,000 premature deaths in the European Union each year.

Meanwhile, the fate of Finland's bid for a $680 million LNG import terminal and Balticconnector undersea pipeline was still undecided after the European Commission included both it and a competing Estonian and Latvian efforts on a list for possible funding released this week.

The country is seeking EU funding for the Finngulf LNG import terminal proposed by the Finnish energy company Gasum, which is coupled with plans for the Balticonnector pipeline under the Gulf of Finland to Estonia.

Backers were hoping it would be the sole survivor among competing proposals when the EU released a list Tuesday of 250 possible energy projects worth billions of dollars in the running for EU funding -- but Estonian and Latvian LNG projects were also included, Estonian Television reported.

The EU has said only one will ultimately receiving funding, meaning a decision among them likely won't be made until spring.

"We must decide which LNG terminal is most suitable," EU Energy Commissioner Gunther Oettinger told ETV. "We are in contact with the ministers and we will make a decision next year."