Finland Grants Support to Three Small LNG Terminals

The Finnish government granted 65.2 million euros (84.22 million US dollar) in subsidies to build three small liquefied natural gas (LNG) terminals to cut on use of fuel oil and liquefied petroleum gas (LPG) in industry, the economy ministry said on Thursday.

Finland is building a network of LNG terminals along its coastline, expecting that LNG will be increasingly used as a shipping fuel in the Baltic Sea.

"With the help of this support, Manga LNG Oy, Skangass Oy, and Oy Aga Ab will build LNG terminals in Tornio, Pori and Rauma respectively," the ministry said in a statement.

Manga LNG is a joint venture, which includes Finnish stainless steel maker Outokumpu Oyj.

Finnish utility Gasum owns 51 percent of Norwegian Skangass, while Swedish Aga is owned by German industrial gases maker Linde AG.

"These new terminals will help facilitate a move to significantly reduce the industrial use of fuel oil and liquid petroleum gas (LPG) in Finland," the ministry added.

From the start of the next year, all ships operating in the North Sea, Baltic Sea and English Channel will have to use a fuel with a maximum sulphur content of 0.1 percent.

Ships are typically powered by heavy fuel oil or bunker oil, which contain 2.5 to 3 percent sulphur on average.

To comply with new rules ship owners could use low-sulphur marine gasoil, which can cost four times as much as high-sulphur bunker fuel, put filters or use LNG.

The later option means that ships would need expensive retrofitting, and a reliable supply chain.

On land companies could be interested to replacing LPG with LNG to cut carbon emissions.

Investments into the three terminals with a combined storage capacity of 90,000 cubic metres will total more than 200 million euros, and they are expected to come in operation in 2016-2017, the ministry said.

The government is still assessing requests for providing investment support for another three terminals.

(1 US dollar = 0.7742 euro)

(Reporting by Nerijus Adomaitis, editing by William Hardy)