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    Contest for EC LNG Funding Hots Up



The European Commission has to decide which, if either, of Estonia’s LNG import projects should receive public funding: Alexela’s project...

by: Linas Jegelevicius

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Contest for EC LNG Funding Hots Up

The European Commission has to decide which, if either, of Estonia’s LNG import projects should receive public funding: Alexela’s project at Paldiski; or one promoted by the local subsidiary of Dutch Vopak, Vopak EOS, at Muuga, near the Estonian capital Tallinn. The two are competing for European Union funding and a decision is expected after November.

Vopak EOS, half-owned by Vopak, plans to set up a smaller regional terminal for LNG bunkering and loading of trucks. “The Tallinn LNG terminal project has been well received by the EU and is eligible for its support. The size of the investment depends on the size of the terminal in the port of Muuga. We estimate the cost to be approximately €250mn,” Vopak EOS spokesperson Olga Van Kampen told NGE.

Vopak EOS says on its website it is the largest independent oil products terminal operator in the Baltic States. The company operates four modern terminals with a total storage capacity of 1,051,800 m³.

Kampen said a smaller LNG terminal would focus on bunkering and truck loading services. “It would serve as the first stage of the regional terminal and its cost could be around €50mn, depending on the final investment decision terms. We are yet considering to apply for Projects of Common Interest (PCI) in 2016 in the Connecting Europe Facility (CEF) co-funding call,” she told NGE.

Asked whether Vopak EOS will pursue a bunkering and reloading project if the EC does not provide the funding, she replied that the company “could comment on that” after all funding decisions are finalized. Vopak EOS has previously said it would like to launch the first stage of the terminal in 2017 and to expand it into a regional terminal by 2019.

The project to set up an LNG terminal in Tallinn is on the list of priorities of the Baltic Energy Market Interconnection Plan in Gas (Bemip Gas) projects of common interest of energy infrastructure in Europe updated in 2015.

The Muuga project is seen as an alternative to a similar project being developed by Alexela, a Tallinn-based holding company with three areas of business: energy, property and metals. The EC says that either terminal – Alexela’s at Paldiski or Vopak’s at Muuga – can be developed.

Lithuania has the first Baltic States' import terminal but paid top dollar for it

Alexela Group’s Company Balti Gaas OU in late 2015 submitted an application for Connecting Europe Facility funding for an LNG terminal in Paldiski.

Alexela told NGE that as the deadline for applications for CEF is this November, the EC will make its decision about funding in the coming months. “Our Paldiski LNG terminal project has been under development since the year 2007. To date, we have completed a wide range of preparations – including the ready-to-go LNG terminal design, completed environmental impact assessment and engineering design work. The documentation allows us to carry out international procurement for construction of the terminal,” a spokesman told NGE.

The terminal project includes an LNG-ocean-ship reception and offloading capabilities with the creation of 160 000 m³ of storage, possibly expandable later to 320 000 m³, equipment for LNG regasification and transmission to Balticconnector, to be shipped to theFinnish, Estonian and Latvian gas networks, and a LNG-based filling station for smaller vessels, trucks and railway wagons.

“Our request to CEF is in total of a volume of €344mn. Alexela has already invested nearly €10mn in this project. Our Paldiski LNG terminal project has also received the approval of the Estonian government and is by far in the most advanced status in the Finnish Gulf area,” Alexela said.


Linas Jegelevicius