Finland gambles with its gas supply

 

  Finland's gas future depends on Russian supplies to Latvia 

By Dmitry Sikorsky 

The refusal of the Finns to use Russian energy resources will come back to bite them, Alexey Grivach, deputy director of the National Energy Security Fund, said in a conversation with the FBA "Economics Today", adding that there is nothing economic in this story. [There is less and less REAL economy in the West, which is substituting financial tricks for the real economy, with central banks simply printing currency to cover debts. The system is fraying around the edges.]

Finland was left without Russian gas

Finnish gas distributor Gasum announced the termination of Russian gas supplies by May 21, 2022. The reason for the situation was Helsinki's refusal to pay for raw materials under the ruble conversion scheme through Gazprombank.

Gasum claims it is ready for such a development of events, and is betting on Balticconnector, a gas pipeline laid along the bottom of the Gulf of Finland from Estonia to Finland, but the rhetoric of the Finnish side is doubtful.

Firstly, the Finns do not have LNG terminals today, so Helsinki cannot buy LNG on the free market, and secondly, the situation is the same in neighboring Estonia, whose economy was powered by Russian gas until February 2022.

Helsinki announced the purchase of a floating LNG terminal from the United States (one of the beneficiaries of this decision), but it is not known when it will be connected to the network. [But besides that, LNG is not a viable substitute for pipelined gas when large amounts are required, because it costs about 40% more than the latter. This makes the decision against Russian gas extremely costly and threatens whole industries while causing immense inflation in households that heat with gas.]

Theoretically, it is possible to link the Finnish energy sector with LNG terminals in Lithuanian Klaipeda and Polish Świnoujście, but this scheme is unprofitable. Pulling gas from there is very expensive, especially without long-term contracts for the supply of LNG. [Actually all sanctions on Russia will prove prohibitively expensive for Europe.]

With the rejection of Russian gas, oil and electricity and the hasty entry into NATO, the Finns are working at a loss. The political elites in Finland are trying to reorient the country towards the United States, despite the enormous losses. [This is based on the gravely erroneous belief that the US is a source of economic and military security. The events in Ukraine are absolute proof that the US has nothing at all to offer to the world except lies and false hopes. The lend-lease, for example, is a hopeless debt trap from which there is no escape. The Ukrainian economy has been shattered by the war. Ironically only Russia offers the stability that Ukraine needs.]

“Finland's gas actions are politically motivated. All this time, anti-Russian hysteria was fueled in Helsinki against the backdrop of the government’s decision to apply for NATO membership,” concludes Grivach.

With the entry into the Alliance, the Finns will have an adventure: the Turks have set a price for agreeing to the NATO application of the Scandinavian countries.

The case may turn into another "small NATO", when the security of Finland and Sweden will be guaranteed directly by the United States. It is obvious that the Finns have worsened their situation economically and geopolitically, turning themselves into a borderland.

“The Finnish authorities are telling the population that it was Russia that stopped the supply of electricity and gas. This is stated in order to justify their choice towards NATO. The Finns accuse us of being tough, but in practice they are breaking off relations,” Grivach sums up.

Helsinki unilaterally refused to cooperate with the Russian energy sector, stopping payments for gas and electricity. "Inter RAO" was forced to stop the supply of power generation after overdue payments by Finland.

“It is the same with gas as it is with electricity. At the same time, the Finns are solving their commercial problems: in 2021, they reduced the intake of raw materials in Russia and refused to pay the difference on the “take or pay” principle,” Grivach states.

The violation of contractual obligations by Finland occurred after the commissioning of the Balticconnector. Today, the Finns cover up those contractual violations that they previously allowed themselves by refusing to pay in rubles.

“Through Balticconnector, it is possible to supply LNG from the Klaipeda terminal and Russian gas that continues to flow to Latvia, but if Riga stops gas cooperation with Russia, then there will be no raw materials,” concludes Grivach.

The LNG terminal in Klaipeda (in Lithuania) will not be enough for Lithuania, Latvia, Estonia and Finland. The situation will become catastrophic if the Latvians refuse Russian gas, and Estonia does not complete its small LNG project by winter.