Eesti Gaas, Gasum to set up gas exchange in Estonia
TALLINN. Jan 10 (Interfax) - Estonian Eesti Gaas and Finish concern Gasum Oy signed an agreement of intent at the end of December, one aim of which was to establish a gas exchange in Estonia.
The companies said in a joint press release that setting up a gas exchange is their contribution to gas market development. Establishing an exchange will act as a preparatory phase to the next step after the construction of liquefied natural gas (LNG) terminals - putting gas up for sale. The exchange should also help future formation of fair prices amid competitive terms between different gas suppliers.
The agreement follows on from a similar document signed in November 2011 between Gasum and Lithuanian company Lietuvos Dujos on establishing a gas exchange in Lithuania. The agreement between Gasum and Eesti Gaas is part of a long-term plan to set up a gas exchange, covering Finland and the three Baltic countries.
The major shareholders like Eesti Gaas, Lietuvos Dujos and Gasum, include Gazprom and Germany's E.ON.
However, Taavi Veskimagi, who heads the Estonian electricity grid operator Elering, said the sole gas supplier (Eesti Gaas is the sole gas distributor in Estonia and Russia provides all that gas) setting up a gas exchange would not ensure transparency and competition, but the complete opposite.
"A gas exchange in essence is not a bad thing, if it is built on the basis of the law, is monitored by a regulator and is a partner of an independent system manager. But if the exchange is opened based on the regulations of the sole gas supplier, then such an exchange will only reinforce distortions on the gas market in Estonia and lead to more market concentration," Veskimagi told the Baltic News Service.
In terms of the development of a transparent and competitive market such an initiative cannot be taken seriously, he said.
Eesti Gaas is no less sceptical about the Estonian government's initiative to make changes to the law on natural gas requiring the separation of the gas transport network from the seller company.
The aim of the project, put together by the Economy and Communications Ministry is to bring the law in line with a European Parliament and Council of Europe directive, containing common rules for domestic natural gas markets.
According to the project, the same entity does not have the right to control the system manager and gas producer or seller. Thus, Eesti Gaas should by 2015 spin out its gas transport grid administration company.
Eesti Gaas is against total separation of gas grid ownership. The company last year instead proposed that a systems operator company be established instead and that the government could have an influence on its decision making.
Economy Minister Juhan Parts said Thursday, January 5, that separating the gas grid operator will only add a 0.2% mark up for transportation to the cost of gas for the consumer. The minister calculated that if a consumer last year paid 11 euros in transportation for almost 200 cubic meters of gas, this will only go up by 2 cents, he said.
Eesti Gaas has questioned these calculations.
"We will be forced to sell the grid by 2015, but the value of the grid will be established during talks," the newspaper Eesti Paevaleht cited Eesti Gaas ChairmanTiit Kullerkupp as saying. This deal will increase the cost of gas much more than suggested by the government, he said.
The newspaper said that keeping the grid in the hands of Eesti Gaas does not guarantee that gas transportation costs will remain low.
Eesti Gaas is involved in the purchase, distribution and sale of natural gas. It also services gas systems, organizes construction of new gas pipelines and develops the gas grid.
Gazprom owns 37.02% of shares in the Estonian company, E.ON Ruhrgas International GmbH - 33.66% and Fortum Heat & Gas Oy - 17.72%.
