Finnish Industry ready for end of Russian natural gas imports

20th May 2022 By: Bloomberg

As Finland braces for an expected halt in natural gas flows from its top supplier Russia, some of the largest industrial users are getting ready.

There’s a “real risk” the taps will be turned off as soon as Friday, according to estimates by importer Gasum Oy, which has refused to pay in rubles. Most of the demand comes from industry -- gas makes up just 5% of the country’s energy mix -- and companies have been preparing for a shut off since Russia’s attack on Ukraine in late February.

They “have done all they can to prepare for the past three months, at least,” said Heikki Lindfors, senior adviser at Finnish Energy, the industry’s lobby.

Neste Oyj is among the country’s biggest consumers of gas, using it to produce hydrogen required in its oil refining operations. The majority of its production is now “secured with other alternatives,” according to Markku Korvenranta, who runs the Oil Products unit. “Neste can replace natural gas with other alternatives and we have already actively worked toward, for instance, the introduction of propane in hydrogen production,” he said in an emailed response to questions.

Two pipelines supply gas into Finland, which has no fossil resources of its own. The bulk of imports flows on the pipeline from Russia, while the Balticconnector brings in about a quarter to a third into the grid from the Baltic states. Gasum said supplying all customers could be “challenging” if it only had the Estonian connection available. Finland is also working with Estonia to rent a floating LNG terminal, targeting imports by the coming winter, and is adding a third small LNG terminal in the autumn.

Another large user is the forest industry, where the top firms have made their plans. Stora Enso Oyj has already stopped using the fuel from Russia and replaced it mainly with liquefied natural gas from the US, according to a spokeswoman. UPM-Kymmene Oyj has contracted flows via the Estonian Balticconnector pipeline, and Metsa Group said it’s in the process of replacing natural gas with oil and LNG.

There is a risk of “serious shortages” if maintenance is needed on the Baltic pipeline while Russian supply is cut off, according to Lindfors at Finnish Energy. A halt of just three days for upkeep could lead to “very complex” situations for the industry, he added.

Among steelmakers, SSAB has secured “non-Russian commercial gas supply” to its Hameenlinna unit in Finland, while in Raahe it buys LNG from Gasum, according to a spokesperson. Outokumpu Oyj runs steelworks in Tornio, far from the pipelines in northern Finland. It ships in LNG and continues to build readiness to use propane should LNG availability become a bottleneck, a spokesperson said.