Identifier
Created
Classification
Origin
06HELSINKI1199
2006-12-01 14:47:00
CONFIDENTIAL
Embassy Helsinki
Cable title:  

ENERGY FROM THE EAST: FINNISH RELIANCE ON RUSSIAN

Tags:  ENRG EPET ETRD EUN FI RS 
pdf how-to read a cable
VZCZCXYZ0000
RR RUEHWEB

DE RUEHHE #1199 3351447
ZNY CCCCC ZZH
R 011447Z DEC 06
FM AMEMBASSY HELSINKI
TO RUEHC/SECSTATE WASHDC 2791
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
C O N F I D E N T I A L HELSINKI 001199 

SIPDIS

SIPDIS

STATE FOR EUR/FO/DAS BRYZA, NB, ERA, EB

E.O. 12958: DECL: 11/30/2016
TAGS: ENRG EPET ETRD EUN FI RS
SUBJECT: ENERGY FROM THE EAST: FINNISH RELIANCE ON RUSSIAN
NATURAL GAS


Classified By: Econ Officer Glenn Lewis for reasons 1.4 (b) and (d).

C O N F I D E N T I A L HELSINKI 001199

SIPDIS

SIPDIS

STATE FOR EUR/FO/DAS BRYZA, NB, ERA, EB

E.O. 12958: DECL: 11/30/2016
TAGS: ENRG EPET ETRD EUN FI RS
SUBJECT: ENERGY FROM THE EAST: FINNISH RELIANCE ON RUSSIAN
NATURAL GAS


Classified By: Econ Officer Glenn Lewis for reasons 1.4 (b) and (d).


1. (C) Summary: Gasum, Finland,s sole supplier of natural
gas, has managed to settle into a peaceful coexistence with
its notorious Russian partner Gazprom. Although totally
dependent on Gazprom for 100 percent of its supply, Gasum
ensures stability through long-term contracts with Gazprom
which has provided uninterrupted supply with next to no
political interference for decades. Nonetheless, Finland
continues to explore all options, including the proposed
Balticconnector natural gas pipeline, which would provide
additional energy security and capacity to Finland. Natural
gas represents 11 percent of Finland's overall energy use.
End summary.

Gasum,s Connection to Russian Gazprom
--------------


2. (C) Gasum is the sole natural gas provider in Finland and
100 percent of its natural gas supply is imported from
Russia. Russian energy giant Gazprom owns 25 percent of
Gasum, the Finnish state owns 24 percent, Finnish energy
company Fortum (also partially government-owned) owns 31
percent and E.ON Ruhrgas owns 20 percent. Gasum CEO Antero
Jannes told econoffs in a November 15 meeting that Gazprom
has been a reliable supplier of natural gas to Finland for
over thirty years and that the overall relationship has been
quite positive. He acknowledged Russian and Gazprom
political influence in neighboring countries, but said
Finland had been largely immune to such interference. To
ensure a stable supply of natural gas through 2025, Gasum
recently negotiated a long-term contract with Gazprom that
allows for minor price adjustments every three years.


3. (C) Jannes said Gazprom has largely been a &hands off8
shareholder and that Gasum,s business decisions have not
been influenced by the overall Russian or Finnish political
climate. Lobbying is almost unknown in Finland, so Gasum
does not discuss Russia policy with the Finnish government.
Also, unlike in some Baltic countries, Gazprom has not placed
&advisors8 in Gasum,s corporate structure, nor does the
contract with Gazprom permit them to do so. Jannes
attributed this to Gazprom,s and Russia,s desire to have a
successful business relationship with Gasum. He acknowledged
that Finland,s preference to work out differences quietly
had most likely also contributed to smooth relations. &We
are used to living with the Russians,8 Jannes said, smiling.

Increasing Energy Security through the Balticconnector
-------------- --------------


4. (SBU) The proposed Balticconnector pipeline would increase
predictability and security of supply by connecting Finland
to large natural gas reserves in Latvia and future liquefied
natural gas (LNG) terminals in the Baltic countries. The
natural gas crisis in Ukraine last winter caused Finnish
consumer confidence in the Russian supply of natural gas to
drop, creating the right climate for Gasum to push for the EU
to conduct a feasibility study for a 100 million euro
pipeline Gasum is considering. The pipeline would link
Finland to the natural gas network in the Baltic countries
thereby increasing the natural gas capacity in Helsinki and
other southern regions in Finland. Natural gas consumption
in Finland is quite low (accounting for just 11 percent of
overall energy use as compared to over 20 percent in most EU
countries),but it is a calculated part of a diverse energy
supply strategy that utilizes natural gas, coal, nuclear,
oil, biofuels, peat and other alternative energy sources.

Finland,s All Business Approach
--------------


5. (C) Comment: Gasum,s relationship with Gazprom is yet
another example of the pragmatic, &all business8 Finnish
approach to energy discussions with Russia. This
non-combative style has enabled the Finns to ensure a stable
natural gas supply from its eastern neighbor. We should
expect the Finns to continue to play this non-confrontational
role with Russia in bilateral and EU-led energy discussions.
At the same time, Gasum will hedge its bets by looking into
options such as the Balticconnector.
WARE