Gasum's proposed plan involves building a gas pipeline under the Baltic Sea from Helsinki to Tallinn, which would then give Gasum access, via Estonia, to Latvia's gas infrastructure, along with the Incukalns underground storage facility, a major gas reservoir. "Incukalns reservoir is the largest in the region," the plant's operations chief Ivars Scerbickis said. "Its current capacity is 2.3bn cum, enough to supply Latvia throughout the winter, with enough left over to send some to Russia and Estonia." Built by the Soviet Union as part of an integrated gas system for NE Europe, the Incukalns reservoir consists of an underground body of porous limestone surrounded by impermeable clay. Throughout the low-demand period of the summer, Russian gas is pumped into Incukalns; it is extracted in winter, and supplies gas to Latvia, Estonia, and western Russia. This protects Incukalns' clients against unexpected supply interruptions, a question which has become pressing since Gazprom's dispute with Ukraine last January. Currently, Finland receives all its gas through two pipelines from Russia, which supply 11% of the country's primary energy needs. It has never suffered a serious interruption. "The only time we ever had a shut-off was in 1991, when a fault developed in a pipe in Russia. It was fixed within 12 hours," Mr Novitsky, a specialist in gas supply, said. Nevertheless, the company is taking energy security seriously. "The main reason for linking into the Baltic grid would be the security which Incukalns could give. However, they ultimately get their gas from the same place we do, so it would only be a partial diversification," Mr Novitsky commented. The subject is also sensitive because a plan to lay the NEGP subsea pipe from Russia to Germany has alarmed the Baltic countries, Poland, and Sweden. Officially, their fears relate to possible environmental impacts, but the risk that the pipe could allow Russia to cut their supplies without harming western countries has also been mentioned. The fact that Gasum's pipe would cross the Russian-German one is not, however, cause for alarm, Mr Novitsky said. "People have been laying subsea pipelines across one another for years – look at the North Sea. I don't see any technical problems with this," he pointed out. Latvia's monopoly gas company Latvijas Gaze (LG) is also keen to expand the reservoir at Incukalns: its planned upgrades should boost its capacity by 200mm cum in 2007, and experts believe further investment could expand capacity by upto 45%. LG has also identified a site in western Latvia where geological conditions would allow for the creation of a second reservoir. This could double Latvia's gas-storage capacity, but would require an investment beyond LG's means. "The whole region needs gas," LG chairman Adrian Davis told senior managers of gas companies from Finland, the Baltics, Central Europe and the former USSR at a recent conference held in Latvia. "Gas suppliers from across Central and Eastern Europe and the CIS should consider investing in an expansion of Latvia's storage capacity as a way of meeting their own energy needs", he added. However, any link-up between Finland and the Baltic gas grid will depend heavily on external factors, Mr Novitsky pointed out. "The final decision will depend on market conditions, both in the gas market and in comparison with other energy sources," he said. Gasum, the sole operator of gas infrastructure in Finland, is joint-owned by the Finnish state, Finnish energy provider Fortum, E.ON Ruhrgas, and Gazprom. E.ON and Gazprom also hold stakes in the Baltic states' national gas companies Eesti Gaas, LG, and Lietuvos Dujos.
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