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    Estonia's Paldiski LNG to be finalised before autumn: press


Project officials said Paldiski was the only Estonian LNG option that could be completed before year-end.

by: Callum Cyrus

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Natural Gas & LNG News, Europe, Security of Supply, Political, News By Country, Estonia

Estonia's Paldiski LNG to be finalised before autumn: press

Estonia could gain its first floating LNG terminal before the end of this year, ERR News reported March 13. Development of the proposed LNG facility, in the Baltic Sea port of Paldiski, could formally get underway later this week.

Infrastructure, property and energy sector developer Alexela will build the new plant in partnership with national gas utility Eesti Gas and Infortar, the owners of local shipping company Tallink. The shareholders have launched talks with several construction companies, and believe a deal could be wrapped up in coming days, according to Alexela's CEO Martti Haal.

Haal told ERR: "Interest has been considerable among builders, both on the local and international levels. We are largely in the finishing stages and hope to sign contracts and launch construction within the week."

Paldiski's shareholders have already sourced the materials and technology to build the LNG plant. Haal said the project's long-term viability was uncertain, given that buyers could switch to Russian gas if the Ukraine crisis recedes.

But company officials believe the project is the only feasible option to bring LNG into Estonia and its neighbours before this autumn, a must if the region is to further reduce deliveries of Russian gas. That gives the shareholders a strong hand, given that the preparation work - in terms of planning and analyses - kicked off years ago, Haal said.

"Replacing Russian gas with LNG will not end up costing the taxpayer an arm and a leg," he argued. "We have had constructive meetings with the transmission system operator that is prepared to connect the floating terminal to the pipeline come fall."

The government of Estonia last week decided it would halt all Russian gas supplies before the end of this year. Tallinn has backed the Paldiski LNG plant, but authorities estimate it would cost €400mn ($433mn) to build, according to Interfax.  The EU previously rejected a grant to cover around 40% of projected expenditures.

Estonia's main alternative to piped Russian gas is the 4bn m3/year Klaipeda LNG terminal in Lithuania.  Eesti Energia became the fourth company to tap supplies from Klaipeda in August 2019, signing an agreement for an unspecified amount of offtake. Klaipeda LNG historically had plenty of free capacity due to competition from Russia's Gazprom, but has seen bookings skyrocket in light of the Ukraine war and now says it will not have spare regasification berths until at least September.