Finland Secures Gas Utility

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - The Finnish government has spent €510 million ($638 million) to buy back a majority stake in its only gas utility, Gasum, in an effort to reduce its dependency on Russian gas supplies.

The government has agreed to pay €310 million for the 31% stake held by Finnish energy company Fortum Oyj (HEL:FUM1V) (Espoo, Finland), and a further €200 million for German utility E.ON's stake of 20%. This takes the government's share to 75%, with the remaining 25% held by Russian gas giant, OAO Gazprom (Moscow, Russia).

The purchase of a majority stake will also allow Finland to get on the right side of the European Union's energy markets directive. Gasum owns the gas grid and also is the sole seller of gas in Finland -- all of which comes from Russia -- but E.U. law demands that separate companies must control the grid and supply the gas. The government will now be able to oversee the splitting of Gasum into separate entities.

"The role of natural gas in Finnish energy supply and in industrial use is important. I'm very satisfied that the Finnish State can execute a long-lasting decision to strengthen its security of supply and further secures a competitive energy supply for the use of Finnish industry", said Minister Sirpa Paatero, responsible for State ownership.

The government claimed that the move will help Gasum to develop the country's gas market and infrastructure with regards to natural gas, biogas and liquefied natural gas (LNG).

Gasum CEO, Johanna Lamminen, commented: "It is important that the owners are committed to Gasum's strategy and long-term development of the company. We actively develop the LNG and bio gas infrastructure and production in Finland and other Nordic countries to be able to offer more competitive energy for our customers' needs".

Finland relies totally on Russian gas. In recent months, there has been increased tensions between the E.U. and Russia over its decision to back pro-Russian separatists in Ukraine. Russia supplies around a third of Europe's gas, half of which comes through Ukraine. A deal signed this week between Russia, Ukraine and the E.U. has offset the threat of European gas shortages for the coming winter. For additional information, see November 5, 2014, article - Europe Secures Winter Gas.

Finland was hoping to reduce its reliance on Russian gas imports by building an LNG import terminal with Estonia. However, last month Gasum announced that the proposed Finngulf import terminal - part of a plan to connect the gas grids of Finland and Estonia via the proposed Balticconnector pipeline - would not be going ahead. For additional information, see October 7, 2014, article - Finland-Estonia LNG Project Canned .

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