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    Estonia's Paldiski LNG project is now underway


Alexela, Eesti Gas and Infortar have instructed Connecto to start development on the Baltic region's second LNG terminal

by: Callum Cyrus

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Natural Gas & LNG News, Europe, News By Country, Estonia

Estonia's Paldiski LNG project is now underway

Estonia has started construction work on a new floating LNG terminal at the port town of Paldiski, aimed at delivering a second channel for LNG imports in the Baltic states, an affiliate of Estonian transmission system operator Elering said June 8.

With the war in Ukraine now in its fourth month, the Baltic region is looking to expand its LNG infrastructure as a way of replacing Russian gas supplies. Paldiski's lead developer Alexela received "considerable" interest in bidding for the construction award, despite fears that cargoes will dry up if Russia's geopolitical relationships improve.

Lithuania, which already has an LNG terminal at the 4bn m3/yr Klaipeda LNG facility, became the first Baltic nation to end Russian imports. Previously laden with inflated energy prices, the impact for Lithuania of Klaipeda LNG's launch, on both energy independence and wholesale rates, has been dramatic.

Estonia expects to deliver Palidiski before the year is out, following in Lithuania's footsteps, while Latvian officials have said a new LNG import station could be built in its capital city Riga.

In normal circumstances, the Lithuanian terminal alone might be sufficient to meet 80% of Baltic gas demand. A significant amount of investment was committed to new regional pipelines and interconnectors. But the loss of Gazprom's supplies have stretched Klaipeda's capacity to the limit. The facility is currently booked up until at least September.

Elering's partner Connecto is undertaking the Paldiski LNG project as the main contractor. Company officials say the route has been marked, and will initially focus on the network's overland pipe sections.  Preparations for the development started last week.

While early estimates indicated Paldiski could cost €400mn ($433mn) to build, it is unclear whether this relates to a floating installation or a permanent LNG import facility. The project is being underwritten by infrastructure, property and energy sector developer Alexela, in partnership with national gas utility Eesti Gas and Infortar, the owners of local shipping company Tallink.