"The initiative came from Finland, which is interested in linking up via Estonia with existing gas storage facilities in Latvia," Raul Kotov, sales director of Estonia's Eesti Gas, told AFP.
The project, called Balticconnector, provides for Finland's Gasum and Estonia's Eesti Gaas to build a pipeline from Turku, Finland, to the northwest Estonian coastal town of Paldiski at a cost of up to 100 million euros (125 million dollars).
"We are currently working on choosing the path of the pipeline and studying the environmental impact," Kotov said. The pipeline would enable Finland to store supplies of gas at underground facilities in Incukalns, Latvia, and then tap into the stocks during peak consumption periods. Estonia already does this in the winter.
Even when the pipeline is built, Finland and Estonia will continue to use Russian gas.
"It would be too expensive to build other links to alternative sources of gas in Scandinavia, for example, so the supply will continue to come from Russia's Gazprom," Kotov said, referring to the state-controlled gas giant.
Finland has said it would be interested in examining the possibility of linking up with the undersea pipeline Russian and German companies have contracted to build in the Baltic Sea.
That pipeline project has raised hackles in the Baltic states of Estonia, Latvia and Lithuania, as well as Poland, who fear it could compromise their energy security.
They are also miffed because they were not consulted in the project, which bypasses their national territory, depriving them of potentially lucrative transit fees, and are concerned about environmental risks in the Baltic, where the former Soviet Union dumped tonnes of chemical weapons after World War II. The Finnish-Estonian pipeline would counterbalance some of the negative aspects of the bigger, Russian-German project, an official at the Estonian econony ministry said. "The Finnish-Estonian project means Estonia will become a transit country for gas," Einari Kisel, head of the energy department at the Estonian Ministry for Economy, told AFP.