Estonia considering building LNG terminal in Paldiski

Gas pipes. Photo is illustrative.
Gas pipes. Photo is illustrative. Source: ERR

At the proposal of the minister of economic affairs, the Estonian state is considering building an LNG terminal in the Northern Estonian port town of Paldiski. The establishing of this terminal would be important above all from an energy security perspective, which is also why the state is willing to financially support the project.

According to electricity and gas system operator Elering CEO Taavi Veskimägi, an LNG terminal can only be built once Estonia has resolved to stop importing Russian natural gas. No such decision has yet been made, however.

So long as natural gas continues to flow from Russia, Incukalns Underground Gas Storage in Latvia will continue to be filled in order to ensure a sufficient supply for next season, Veskimägi said.

Additional supply chains should be sought out at the same time as well, such as bringing in additional gas from the Klaipeda LNG terminal in Lithuania. Once the recently completed Gas Interconnection Poland-Lithuania (GIPL) pipeline goes online on May 1, however, LNG will begin to be shipped from Klaipeda to Poland.

"The 30 terawatt-hours, which is the capacity of the Klaipeda terminal, surely won't all remain in Estonia, Latvia, Lithuania and Finland," the Elering CEO explained. "Part of this will be heading toward Poland via the Lithuanian-Polish connection."

Earlier this month, the EU set a deadline of 2027 for achieving independence from Russian energy sources. Minister of Economic Affairs and Infrastructure Taavi Aas (Center) warned, however, that Russia may respond by ending the sale of natural gas to Europe. Which is why the minister submitted a proposal to the Estonian government last week for the construction of a temporary LNG terminal in Paldiski.

"This area is already essentially terminal-ready as such," Aas highlighted, noting that fuel seller Alexela had already completed a significant amount of preliminary work in that regard. "Now the matters of how to build this rapidly and what the guarantees should be — these must still be decided."

According to the minister, the state may financially support the terminal's construction.

"It may be the case that the terminal is entirely economically justified, but it may also be the case that the economic justification isn't all that great," he said. "It is, however, significant specifically from a security perspective, which is where the state naturally has its role to play."

Alexela has already announced that it has offered the Estonian government a concrete solution for fully divesting from Russian gas for the 2022-2023 heating season already and allowing Finland to join the boycott as well.

According to Veskimägi, however, it is only worth seriously discussing using more expensive LNG once cheaper natural gas is no longer coming in from Russia.

"The approximately €100 million annual bill that will be racked up by the establishment of this capacity still needs to be paid by someone," he said. "We have established this capacity, but pipeline gas continues to flow, and it isn't economically reasonable. These two decisions should be made in tandem: to terminate the purchase of Russian gas, and to establish LNG capacity in Estonia."


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Editor: Aili Vahtla

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