Revelations About The Damaged Estonian–Finnish Gas Pipeline Quickly Erode The Likelyhood Of This Being An Accident.
The loss of this particular gas pipeline has limited security of supply implications, but damage to it and underwater comms infrastructure is a flashing red light for NATO.
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Balticconnector, a gas pipeline connecting Finland and Estronia, suffered a loss of pressure at around midnight, on the night of Saturday to Sunday, October 7 to 8, 2023.
Here's what we know as of November 1, 2023.
Map: GIE
Some Background
This pipeline going offline has limited security of supply implications.
The Baltic region does not produce it’s own gas and historically has been wholly supplied by Gazprom. Balticconnector connects Finland to the European gas grid via Baltic states and Poland. It has been operational since 2020.
Gas makes up a small portion of Finland’s energy mix (<5%) but is not entirely readily replacable with alternatives. It is used mostly in industry and heating.
The pipeline has been the only import route for Finland on a nearly sufficient scale since Russia cut off the gas supply to the region on May 20, 2022. Likely as a retaliation for the country’s accesion to NATO and/or refusal to participate in Russia’s “rubles for gas” sanctions busting payment scheme.
Balticconnector’s security of supply role was diminished since the start up of Inkoo LNG import terminal in January 2022. It means that there is sufficient alternative non–Russian gas import capacity on both ends of the pipeline - in Finland as well as in the Baltics.
This is a small European gas market periphery, a price taker, not a setter.
The regional gas consumption in the Baltics and Finland – markets around the damaged pipeline – pre-Russia’s war on Ukraine ammounts to 6,4 bn cubic meters or 62,52 TWh and shrank since. That is less than 10% of Germany’s final consumption (per IEA data).
Significant ammount of contracts are indexed to TTF.
Physical flows of gas via Balticonnector, 7-8th of October, 2023. Source: ENTSOG Transparency Platform
Damage Not Accidental
It was initially announced that the leak occured offshore, nobody was hurt and everybody has gas. As is usually the case with underwater infrastructure, it was immediately clear repairs can take months, depending on the damage.
Finnish and Estonian authorities called their first separate press conferences on Tuesday, October 10th, 2023.
We learned that the failure was caused by an external influence. Whether the damage was deliberate or not was not explicitly stated.
One of the telecommunication cables, situated close to the pipeline, was also damaged during the incident.
The pipeline broke offshore, in the Finnish economic zone, pressure in the pipeline equalized to indicate damage 60 m underwater. According to telco cable operator Elisa, it is damaged in the Estonian economic zone.
Damage to the cable and pipeline occurred in the space of two hours.
Later Sweden will report damage to one more telecomms cable.
This greatly reducd the likelyhood of this being an accident.
We have also learned some details about the breach itself.
According to Estonians assessing photos from the scene, the damage was not caused by a diver or a small underwater drone, the damage is more extensive.
NATO has been contacted about the incident.
This indicated that the incident is at least potentially seen as a threat to the security of the countries or the alliance.
Crime Scene and Evidence
By October 20, 2023, Finnish police was done with their crime scene investigation.
It confirmed once again that damage to the pipeline was external. There was also a heavy object found by the pipeline.
“No reason to think it was an explosion”, – Finnish police investigators say.
A Chinese-owned cargo ship “NewNew Polar Bear” became the focus of the investigation.
The heavy object will later be confirmed as a 6 tonne anchor, presumably, belonging to the aforementioned cargo ship.
Authorities claim to have tried to contact the ship but to no avail. The ship made her trip from Konigsberg to Saint Petersburg and then left the Baltic for Archangelsk unimpeded.
Estonia and Finland have a 6 nautical mile wide strip of EEZ waters, set up in 1993, when both countries retracted their territorial waters 3 miles each. That, as Finnish and Estonian authorities claim, was the location of the breach and hence impeded their ability to act.
Seismic Question
NORSAR reported having detected an explosion at the time and place corresponding to the gas pipeline.
This somewhat contradicted earlier press and official reports that specifically indicated the incident not being an explosion. NORSAR was dancing around the notion of what the explosion actually is.
“We are unable to determine if the event was caused by a suden release of gas under high pressure, due to rupturing of the pipeiline, or from the detonation of an explosive”, company says in the statement.
“We know that it wasn't an earthquake and we know there was an explosion but what actually caused the explosion is something to be further investigated,” Anne Strommen Lycke, NORSAR CEO, told Reuters.
Finnish seismologists at the Helsinki University corroborated NORSAT findings of seismic activity around the time and place of the incident. Signature, however, is relatively weak.
Repair Estimates, Market Impact
As mentioned before, Balticconnector is a peripheral gas interconnection with sufficient alternatives on both sides of it.
The unnexpected announcement about the upcoming press conference on October 10 had a temporary impact on the European market price. TTF jumped 12% before the press conferences.
This impact was later overshadowed by coming winter and by other geopolitical flare-ups.
Front-month TTF gas prices on 10th of October, 2023. Source: ICE
The loss of this pipeline did change the supply logistics in the region somewhat.
Some gas, intended for winter use by consumers in Finland was now stuck in Inčukalns UGS in Latvia. That gas will be swapped with LNG deliveries to Inkoo.
This will probably increase the traffic towards the latter. It may or may not mean diverted cargoes from Klaipėda LNG import terminal.
By October 20 Gasgrid confirmed it’s preliminary repair estimate first offered on 11th - it would take at least 5 months to repair the pipeline. Hence, the startup is set to commence by the begining of April 2024 at the earliest.
By October 25 Gasgrid announced a new schedule for deliveries to Inkoo LNG.
On October 31 Gasgrid announced they finnished inspecting the entire length of Balticconnector and found no irregularities aside from the initial damage.
Takeaways:
NATO needs a better algorithm to respond to grey-zone or hybrid operations against offshore infrastructure. Possibility of getting caught immediately could serve as a deterrance for the potential perpetrators, too.
It is difficult to ensure constant overwatch for all of the infrastructure, but the availability of seismic data, satellite imagery and other data lends itself to creating tools that would enable a quick response.