Businessman: Unfortunate it took a war to drive home LNG terminal necessity
CEO and owner of Alexela Logistics, that wants to construct an LNG terminal in Paldiski, Heiti Hääl said that it is unfortunate it took the war in Ukraine to make the government realize the need for the terminal. He added that it remains unclear whether and when one can be set up.
Hääl said on the "Terevisioon" morning show on Friday that Alexela has been after an LNG terminal in Paldiski for the last 12 years.
"It is unfortunate that it took a war for the Estonian government to finally realize that it is a sensible plan. The Lithuanian government understood as much eight years ago.
Hääl admitted that it is too soon to say whether a terminal will be set up in Paldiski this fall.
"We have reached a phase where the three-legged stool has two of its three legs. The first was our desire to do it, the second the government's decision from Thursday. The third leg, or whether and when it will actually happen, is still unclear," Hääl said.
Hääl also talked about the effects of the war on Estonian transit.
"Talking about transit, it definitely has an effect. Transit is a natural resource for Estonia in terms of taking advantage of our geographical position. Moving goods from east to west. Ports have invested massively in the business. The sector employs a lot of people – 5.000 families' income depends on it. Transit in Estonia reached its zenith in 2006 when it yielded 15 percent of GDP. Goods volume has fallen fourfold since then, as has transit's share in the economy. It is unclear how much more we stand to lose."
Hääl said that Alexela will cope in the new situation, while sanctions against Russia need to be Europe-wide.
"We are getting by today. Things are not as bad as that. Everything will depend on the nature of sanctions. Overall, fertilizer is having the biggest effect. The thing with sanctions is that, of course, we need to curb funding Putin's war machine. But sanctions only work if they are Europe-wide. Anything Estonia would attempt on its own would simply amount to voluntarily surrendering revenue to neighbors."
Asked whether border trade with Russia should simply be ended, Hääl said it would only have an effect if done everywhere in Europe.
"For example, there has been a lot of talk in our sector of denying ships under the Russian flag entry to our ports. It would have no effect whatsoever. Moving a ship from under the Russian flag to that of Liberia is a matter of a couple of days. Estonia does not constitute a market in the world of transport. The entire Baltic Sea region does, and only things where everyone is on board are effective."
Hääl also said that gas stations in Estonia and the other Baltic countries have not carried Russian gasoline and diesel for the last decade.
"Quality requirements are simply too different, with our fuel coming from plants in Europe. But raw material comes from Russia as transport expenses are a key component in price. The market has introduced sanctions on Russian oil products today. The market is toxic and the Russians forced to sell at a great discount. But it does not affect domestic consumption in Estonia."
Hääl added that bottled gas is one area where effects might be more profound.
"Spring is coming and people will be firing up their grills. The propane in the tanks that we use has come exclusively from Russia so far. There is no infrastructure in the Baltics for bringing it from Europe and to Europe," the businessman said.
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Editor: Marcus Turovski