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Estonia Gas Grid Nationalization Seen as Last Option, Ansip Says

Dec. 21 (Bloomberg) -- Estonia’s government would only consider nationalizing AS Eesti Gaas’s natural-gas transmission network as a “last option” as it seeks to develop the market for the fuel, Prime Minister Andrus Ansip said.

“Estonia has a record of privatization in many industries,” Ansip said yesterday in an interview in the capital, Tallinn. “We wouldn’t want to start moving in the opposite direction without an urgent need. Still, nationalization is not completely ruled out.”

Ansip’s ruling Reform Party published plans last year to unbundle the gas industry and reduce dependence on OAO Gazprom, Eesti Gaas’s biggest owner and the sole supplier of gas to Estonia, Latvia and Lithuania. The government should nationalize Eesti Gaas’s pipelines to create a functioning energy market, Elering AS, the country’s power grid operator, said last month.

The Economy Ministry has drafted a bill to separate ownership of gas sales and transmission by 2015. Lithuania announced a similar plan at Lietuvos Dujos AB last year, drawing criticism from Gazprom and Germany’s E.ON AG, which also has a stake in Eesti Gaas.

Estonia should decide on splitting Eesti Gaas’s sales and transmission units by 2015, nationalizing the grid and building a regional or local LNG terminal, Taavi Veskimagi, chief executive officer of Elering, said in the foreword of a report by Poeyry Oyj, a Finnish consulting company, on Nov. 29.

The three Baltic nations are also seeking EU support to build a liquefied natural gas terminal in the region, saying they’re being charged more for Russian gas imports than western European countries and citing supply risks from their neighbor.

To contact the reporter on this story: Ott Ummelas in Tallinn at oummelas@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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