BALTIC CONNECTOR OY

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Transforming the status quo

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Integrating Finland into the European gas market Herkko Plit, CEO and President of Baltic Connector OY, reveals how one of the EU’s flagship energy projects is set to change the regional status quo Writer: Jonathan Dyble | Project Manager: Richard Thomas

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ILF CONSULTING ENGINEERS POLSKA

ILF Consulting Engineers Polska (ILF Poland) ranks among leading engineering and consulting companies and provides top quality services in four core business areas.

Combining long-standing professional experience with technical and managerial knowledge, ILF Poland successfully provides support during all project execution phases – “one stop shopping”. Our services include, among others: feasibility studies, technical analyses, conceptual, building permit and detailed designs, PMC, integrated plant engineering & design (PDMS, E3D, AutoCAD Plant 3D, CADISON, Revit).

We have been dealing with even the most complex interdisciplinary tasks for more than 20 years. Thanks to our international know-how and highly competent staff who benefit from synthesis of skills and experience of almost 2,000 ILF Consulting Engineers employees all over the world, we meet even the most demanding expectations. ILF Poland has succeeded in implementing around 300 projects in various business areas in Europe, the Americas, Africa and Asia. Our clients are public sector institutions as well as private investors.

We are part of ILF Consulting Engineers – an international group of engineering companies that has been gaining experience in the market for more than 50 years.

Oil, Gas & Industrial Upstream Underground Storage Pipeline Systems Tank Farms & Terminals Liquefied Natural Gas (LNG) Refining Chemicals & Petrochemicals Key achievements: • ILF ranked #7 in the category “Pipelines” (source: ENR 2017Top International Design Firms) • > 2,000 km gas pipeline, 56” – among the largest pipelines in terms of both diameter and CAPEX (TANAP, Turkey) • Design for pipelines in extreme consitions: mountain terrain, rainforests and swamps or arctic and permafrost regions

Energy & Climate Protection

Water & Environment

Transportation & Structures

Solar Power Wind Power Hydropower Bioenergy Thermal Power Waste to Energy Power Transmission & Distribution Energy Storage Distributed Energy Supply

Desalination Water Treatment Wastewater Treatment Industrial Water Water Transmission Urban Water

Multimodal Transportation Railways Urban Transportation Roads Airports Ports & Maritime Tunnels & Caverns Buildings & Structures Ski Resorts

Key achievements: • Europe’s largest hard-coal-fired power unit (Kozienice Power Plant, 1,075 MWel, Poland) • World’s largest waste to energy plant (Dubai Waste to Energy Plant, 1,825,000 Mg/a, UAE) • 1,000 MW solar power (PV/CSP) park, UAE

Key achievements: • One of East-Central Europe’s largest WWTP (Czajka WWTP, 435,300 m3/d, Warsaw, Poland) • World’s largest drinking water transmission system (Rabigh – Jeddah / Makkah / Taif WTS, 1.3 million m3/d max. capacity, Saudi Arabia) • World’s largest reverse osmosis desalination plant (Magtaa IWP, 500,000 m3/d, Algeria)

Key achievements: • The world’s longest railway tunnels (Gotthard Base Tunnel 57 km, Brenner Base Tunnel 55 km) • 6,500+ km of railway lines • Up to 57 million passengers/year – three of the largest airports in Europe (Frankfurt, Munich, Berlin; Germany)

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Herkko Plit • Worked as the Responsible Project Director for the Olkiluoto 3 Nuclear Power Plant construction project • Worked for Fortum corporation for several years, and appointed as President of the Fortum Nuclear Services in May 2008 • Stood as the Deputy Director General for the Ministry of Employment and the Economy within Finland’s Energy Department between 2012-2016

The EU gas market will be transformed, not only in reducing Russia’s position as an essential gas supplier in the EU, but also in expanding market aspirations – which is something that we are really hoping to see in the outcomes of the project,” says Herkko Plit, CEO and President of the EUfunded pipeline project, Balticconnector.

In a volatile geopolitical climate, enhancing regional energy security has become an increasingly pressing issue for the European Union.

In the aim of achieving this, the European Commission (EC) is attempting to merge key regional gas networks across the Europe, a goal that has led to the development of several key infrastructure projects.

One such project is Balticconnector.

With the Finnish government having introduced a new company,

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• Has held leadership positions at the European Commission and is currently the Chairman of the Fusion for Energy Procurement and Contacts Committee • Was appointed as Chair of the Board at Baltic Connector in November 2015 • Became the President and CEO of Baltic Connector in October 2016

Two decades in the making

Herkko Plit

Baltic Connector Oy, to oversee its construction, the pipeline is expected to play a key role in remodelling the status quo in the energy market, both politically and economically.

“The story of Balticconnector started almost 20 years ago, when people began to discuss how we might better connect the Baltic region to other countries,” Plit explains. “In 2011–2012 these discussions really got boosted, largely after the European Commission (EC) announced that it was planning to help funding some of the most crucial infrastructure projects in Europe.

“As a result, the Balticconnector project, together with the creation of a new major energy terminal, began to become more of a reality.”

Andrzej Dercz, ILF Consulting Engineers Polska President & CEO

Interview with Andrzej Dercz, ILF Consulting Engineers Polska President & CEO The company was founded in the late 90s: what did the beginning look like?

AD: ILF entered the Polish market in 1998 when providing technical consultancy services for construction of the compressor station on the Yamal pipeline. In the beginning, ILF Poland carried out projects only in the oil & gas sector, mainly in cooperation with the ILF Group. Despite being a small company, we were able to build a competitive advantage because of our international experience, know-how and motivation.

What was the greatest breakthrough?

AD: Thanks to the booming market in 2001, we were able to enter the environmental sector. The pinnacle of this was the Czajka WWTP project, one of the biggest wastewater treatment plants in East-Central Europe for which ILF Poland provided most of the detailed engineering services.

In 2007 we established our position on the energy market by providing complex engineering services for the construction of the Częstochowa Combined Heat and Power Plant, carried out in EPCM formula, which was little known in Poland at the time. The investment paved the way for a series of new contracts, such as the owner’s engineer services for Kozienice Power Plant, the largest hard-coal-fired power unit in Europe. The next breakthrough came in 2009, when we won a few major contracts, including design and procurement services for the development of the Aqaba Compressor Station in Jordan. That year we also undertook design works for the

II metro line in Warsaw - this was the biggest contract in the company’s history, and it allowed us to join the elite circle of companies providing metro-related services.

Our successes from recent years also include designing more than 8,500 km of gas pipelines across the world, including the Balticconnector gas pipeline (offshore and onshore section together with compressor stations) for which ILF Poland is providing EPCM services, and also several services for LNG Terminals in Poland and Ukraine.

ILF focuses on four business areas: why is that so important?

AD: Being active in so many business areas allows us to be flexible and address the needs of the changing world. We are able to combine technical expertise from various disciplines, implement a holistic approach and provide comprehensive services for even the most complex, interdisciplinary tasks.

We provide services for all project execution phases from feasibility studies through basic design and detailed engineering down to site supervision and commisioning.

Where do you see ILF in the future?

AD: We see ILF Poland as one of the key members of the ILF Group when carrying out projects that require cooperation among several companies. We aspire to be the leading consultant in Poland, by keeping our position in the markets already gained and developing new ones, such as renewables, energy storage or sustainability of industrial processes. We are also planning to increase our presence on the international markets, particularly for renewables and public transportation.

E info.waw@ilf.com T+48 22 430 26 00 www.poland.ilf.com

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KROHNE Baltic Connector Oy selects KROHNE as supplier for CT gas metering system.

One of the key components of the Baltic Connector pipeline is the Custody Transfer metering system that measures the amount of supplied gas, as this links directly to the cash registers of buyer and seller of the gas.

Baltic Connector Oy selected KROHNE Oil & Gas as supplier for the Custody Transfer flow meter runs for the Finnish compressor and measuring station in Inkoo. With local presence in 100 countries and an impressive global track record, KROHNE is a well-known supplier for process instrumentation, custody transfer flowmeters and fully engineered metering systems.

The pipeline, once complete, will transport 7.2 million cubic feet of gas a day

Since then, the Estonian and Finnish governments agreed an LNG terminal would be set up in Finland, with an offshore pipeline connecting the two countries’ gas networks to be implemented directly across the Baltic Sea. Later in 2015 with the change of

The five subprojects • Onshore pipeline between Siuntio and Inkoo (Finland): 21km • Offshore pipeline between Inkoo (Finland) and Paldiski (Estonia): 77km • Onshore pipeline between Paldiski-Kiili (Estonia): 55km • Compression and metering station in Inkoo (Finland) • Compression and metering station in Kersalu (Estonia)

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the project promoter, the LNG terminal was left out and it was prioritized to focus on Balticconnector pipeline.

With a total cost of €250 million, the project has been divided into five segments that in total will see the construction of 153 kilometres of pipeline alongside two compression and metering stations; one in Inkoo, Finland and the other in Kersalu, Estonia.

Upon completion, it is estimated that the transmission capacity of the pipeline will be 7.2 million cubic feet, equating to 72 GWh per day, whilst the pipeline itself will allow gas to be transported bi-directionally according to market demand.

“By the summer of this year we had finished a detailed design of the project, had received the necessary permits and finalised all of our procurement plans,” Plit reveals. “Now we are fully in the construction phase of the project; a period that we expect to continue until the end of 2019, where after the gas can start operating.”

The metering system consists of three meter runs using KROHNE’s ALTOSONIC V12 ultrasonic gas flowmeter. As it enables installation without flow conditioner while maintaining compliance to standards as OIML R137 and AGA9, pressure drop over the meter runs is limited to an absolute minimum. This contributes to running the compressor station as efficient as possible. Custody transfer flow calculations are done by KROHNE’s SUMMIT 8,800 flow computers with full colour touchscreen in redundant setup. SynEnergy Supervisory software is installed on the supervisory computers.

The system is manufactured in KROHNE’s 30,000 square metre production facility in the Netherlands.

Onsite commissioning and training will be carried out by KROHNE and its local Finnish partner Tecalemit Flow Oy. Baltic Connector Oy is a state-owned company set up in 2015 to implement the Finnish part of the Baltic Connector gas pipeline to be built between Finland and Estonia.

krohne.com/altosonic-v12

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High accurate flow measurement with immediate detection of contamination ALTOSONIC V12 – technology driven by KROHNE • 12 path ultrasonic gas flowmeter for custody transfer, OIML R137 class 0.5 and AGA 9 • Just 5D straight inlet required due to swirl compensation in each measuring plane • Dedicated diagnostic paths for deposits, dirt or changes in surface roughness • KROHNE Care: web-based, extended CBM diagnostics expert system for continuous meter health check

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More facts: krohne.com/altosonic-v12

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Roschier - part of Baltic Connector’s success story

Mikko Ruokonen, Construction Manager, Compressor Station at Baltic Connector Oy, Laura Huomo, Energy and Capital Markets Counsel at Roschier, and Toni Siimes, Partner at Roschier visiting the Baltic Connector construction site in Inkoo.

“A greener economy” is on both Baltic Connector’s and Roschier’s agenda. Baltic Connector is a pioneer in opening doors to new opportunities for the Finnish economy and Roschier is now part of Baltic Connector’s success story.

Roschier’s Projects & Energy practice focuses on infrastructure and energy projects and related M&A work, and is well suited for international projects like Balticconnector.

Roschier was selected as the law firm to provide all legal assistance in the Balticconnector-pipeline project. Roschier’s main contacts in the project are Energy and Capital Markets Counsel Laura Huomo and Partner Toni Siimes.

“The Roschier team’s expertise in Gas Market and Contract Law is top-notch. Laura Huomo and the team really consider what’s best for our company, explore every possibility and make sound and intelligible recommendations”, states Arja Koski, Strategy and Procurement Director of Baltic Connector.

Natural gas regulation and projects are at the core of our projects practice and our lawyers have been involved in opening up the new gas market from the very beginning.

“Through this project and other gas-related projects, it has been a privilege to be part of Finnish energy history and actually make a difference”, states Laura Huomo. “The project has also required help from our international network of contacts, as we have benchmarked our approach to agreements not previously seen on the Finnish market”, continues Toni Siimes.

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European gas market potential

Plit admits that the project is by no means the largest of its kind, however, he stresses that its strategic influence will be worth substantially more to the EU, not only in bolstering the continent’s energy security, but also in enhancing the gas market itself.

“Having set up Baltic Connector Oy in 2015 we quickly applied for funding from the EC’s Connecting Europe Facility initiative that was introduced to help finance major gas infrastructure projects across the EU,” Plit explains.

“It immediately became clear that the project was critical for both the region and Europe, and so the EU agreed to fund 75 percent of the project.

“No other energy project in Europe before had received this level of funding.”

Balticconnector’s importance has been magnified from coinciding with two other pipeline projects that combined will play a key role

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in facilitating the levels of market integration that the EU is hoping to achieve.

The Gas Interconnection PolandLithuania (GIPL) project, partially funded by the Estonian government, will connect Poland’s and Lithuania’s gas networks, whilst the Baltic Pipe project will allow the transport of gas

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from Norway to the Danish and Polish markets.

Alongside existing gas infrastructure, these three key emerging projects will markedly improve the accessibility of natural gas between the Baltics and the rest of Europe, paving the way for a range of new possibilities.

Your business.

Our dedication.

At Roschier, we believe the best advice is built on a deep understanding achievable only through dedication.

It’s an approach we’re committed to. By working closely with our clients and sharing their realities, we ensure advice that reaches beyond the obvious.

Roschier’s Projects & Energy practice offers an end-to-end service that caters to the specific needs of individual clients or a consortium of partners involved in significant projects, like energy or infrastructure projects, industrial production sites and datacenters. We are familiar with Nordic laws and regulations and have extensive experience, garnered from participation in a significant number of transactions, disputes and projects, which gives us the sophisticated business perspective necessary to advise our major global industry players cross-border and cross-practice.

Roschier – your law firm when it matters

“They understood our business requirements and tailored their advice to our needs rather than their firm’s benefit.”

Chambers Europe 2018, Energy & Natural Resources - Finland

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RTA

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TA has implemented two contract types for the compressor station of Baltic Connector in Inkoo: an earthwork and appliance foundation contract and a construction contract.

RTA functions as the main contractor, responsible for workforce scheduling and resourcing and the compatibility of appliance installations and construction works is equally important.

RTA has solid experience in similar tasks and can provide professional excellence. “We are quick and flexible in changing situations. We can also provide the contractors with a professional project management organisation and resources. Co-operation with Baltic Connector has been very successful,” states technical manager Harri Virtanen.

The pipeline will connect Finland to Estonia

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“The importance of the Balticconnector project is much, much larger than its value would suggest, evident in the fact that the Commission President, Finnish and Estonian Prime Ministers were all present during the signing of the grand agreement with the EC,” Plit points.

“It’s really a flagship project for the EU.”

Considering the future

The trend in the global energy market has increasingly shifted towards renewables therefore guaranteeing longevity was paramount to Plit throughout the project’s planning phase.

“Some might consider natural gas to be a short-term solution, but we have ensured that this project will embody the future of regional energy transfers for the long term,” he says.

“Whilst these gas pipelines have been constructed to carry phosphide gas, we have made certain that they can

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The pipeline will connect Finland to Estonia

be repurposed to transport alternative fuels, such as biogas or hydrogen.

“Strategic infrastructure such as Balticconnector is going to be fundamental to our future. If we want to continue to have a competitive energy market, it is important that

such infrastructure is prepared for long term changes in the market.”

This was just one of several considerations made by the Baltic Connector Company during its extensive design phase – something that Plit feels has been essential to the success of the project to date, forecasted to be finished both on time and on budget.

“Because of the project’s significance, not only to us but to the whole of Europe, it has been crucial that it has remained on schedule,” he says.

“Our implementation is really going well thus far, as we had promised the EC. “We did our homework, we took the time to ensure our design plans were as adept and detailed as possible, and as a result I hope that by the end of our timeline we can say that there is an integrated Finnish and Baltic gas market that is connected to the EU,” Plit concludes.

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