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Floating LNG terminal in Inkoo will provide gas to Finland and Estonia

In December 2022, a floating LNG terminal is expected to arrive at Inkoo Port on the southern coast of Finland. With a storage capacity of 150,900 cubic metres, the LNG terminal vessel ’Exemplar’ will deliver liquefied natural gas (LNG) for the needs of Finnish and Estonian industries throughout the next ten years.

In May of this year, the Finnish energy company Gasgrid Finland signed a lease with Excelerate Energy, Inc. The lease is for the terminal ship ’Exemplar’ for the duration of a decade, with the aim of having the terminal available already next winter.

This development will provide independence from Russian pipeline gas. Formerly, Russian natural gas supplies were routed through a pipeline via Imatra but they were stopped in the spring of 2022.

Located to the west of Helsinki on the southern Finnish coastline, Inkoo – the terminal ship’s destination – already has an optimal deep-water port at close proximity to the pipelines distributing natural gas mainly to industrial end-users in the Baltic region.

The floating storage and re-gasification unit (FSRU) ’Exemplar’ has a length of 291 meters and a width of 43 meters. The ship’s volume corresponds to approximately 68,000 tonnes of LNG when fully loaded. This will provide approximately 1,050 GWh of energy content, or – with refills – more than 40 TWh annually.

Mr. Riku Huttunen, Director General of the Energy Department of the Ministry of Economic Affairs and Employment says that the crucial thing is to have the floating LNG terminal ready for use for the oncoming winter. This is a critical precautionary measure for the energy security both in Finland and in Estonia.
photo: ALEKSI MALINEN / TYÖ- JA ELINKEINOMINISTERIÖ

The ’Exemplar’ was built in South Korea and completed in 2010. She is equipped with Kawasaki’s 26,500 kW gas turbine engine. The Texas-based Excelerate Energy acquired the ship in 2017. Before setting course to Inkoo, the ship was stationed in Argentina.

Once the floating terminal is in position, smaller LNG tankers are expected to visit and refill it two to three times every month.

URGENT NEED FOR NEW GAS SOURCES

The Government of Finland started to prepare for the termination of pipeline gas supplies in April 2022. The tasks of leasing a suitable LNG terminal and taking care of all related practicalities were delegated to the state-owned gas grid company Gasgrid Finland.

As Russia has proved to be an unreliable energy supplier, new sources for natural gas are required absolutely and urgently.

Of the total annual energy usage in Finland, the share of natural gas is approximately five percent. In particular, natural gas is needed for industrial processes, CHP energy production, and heavy traffic. However, the floating terminal will also secure gas supplies for households that use natural gas.

The terminal ship will essentially be utilised as an anchored LNG terminal where the liquefied natural gas is re-vaporised into gasefied state and then supplied into Gasgrid’s transmission grid. While the ’Exemplar’ remains technically a ship, she becomes a movable part of the gas-supply infrastructure, operating as sort of a transformer unit.

Part of the re-gasified natural gas will be routed to Estonia, through the existing pipeline connection. The total costs of the floating terminal for the 10-year usage period are estimated to be approximately 460 million euros, with some additional costs depending on the usage volumes.

A CRUCIAL MEASURE FOR AVOIDING GAS SHORTAGES

Mr. Riku Huttunen, Director General of the Energy Department of the Ministry of Economic Affairs and Employment in Finland, confirms that the floating LNG terminal is expected to be in use in Inkoo in December 2022.

”The terminal ship will fulfil the needs of the industrial natural gas users in Finland. Since May 2022, our country has received natural gas solely through the Balticconnector pipeline.”

”Thus far, those supplies have been sufficient. However, if we had no floating LNG terminal ready for use this winter, we would run the risk of industrial gas shortages,” Mr. Huttunen notes.

He adds that the increased gas supplies also have an effect on the gas prices and electricity production.

”For the LNG terminal ship, Finland and Estonia have signed a memorandum of understanding. According to this document, the expenses of the terminal will be shared between the countries, divided in accordance with a ratio determined by the gas usage – that is, 80 percent for Finland and 20 percent for Estonia.”

”The floating terminal will provide natural gas for the shared market.

So far, Estonia has not yet provided the terminal company with equity, and consequently Finland has for the time being financed the project as a whole via Gasgrid Finland Oy,” explains Huttunen.

As a precaution and in order to secure future gas supplies, Finland and Estonia had previously agreed that both countries should be prepared for the arrival of a gas terminal ship supplying natural gas for the shared fuel market. In Estonia, Paldiski Port is an optional site for the terminal ship.

In the larger Baltic region, a similar type of floating LNG terminal has already been stationed in Klaipeda in Lithuania where it has been operational for a number of years.

”The crucial thing is to have the floating LNG terminal ready for use for the oncoming winter. This is a critical precautionary measure for the energy security both in Finland and in Estonia,” Mr. Huttunen emphasises.

by: Ari Mononen