Baltic Gas Supply Security: Divided We Stand?

Pierre Noel (), Sachi Findlater and Chi Kong Chyong

Economics of Energy & Environmental Policy, 2013, vol. Volume 2, issue Number 1

Abstract: Estonia, Latvia and Lithuania, depending entirely on Russia for their gas supply, want to invest in gas supply security. The European Commission encourages them to do so by conditioning subsidies to the building of joint regional infrastructure. In the face of serious political and legal hurdles to Baltic gas security co-operation, Brussels' approach might be misguided if it prevents the implementation of workable national policy alternatives. Our calculations show that the Baltic States could insure their gas-fired district heating systems for small security premiums. Each country could insure its entire peak gas consumption against even long-lived disruptions for a premium of about 10% by building a national LNG terminal. A joint Baltic LNG terminal is indeed cheaper in most cases, but only marginally so. We conclude that the Baltic States should go ahead with national solutions.

JEL-codes: F0 (search for similar items in EconPapers)
Date: 2013
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