Minister: LNG terminal would allow giving up Russian gas by fall

Jaak Aab.
Jaak Aab. Source: Ken Mürk/ERR

Minister of Public Administration Jaak Aab (Center) said that the creation of an LNG terminal in Estonia would make it possible to give up Russian gas by fall. The Center Party is after additional benefits in the supplementary budget, while no agreement has been reached with coalition partner Reform.

Aab said that roughly three-quarters of Estonia's supplementary state budget has now been laid down, including this year's additional defense spending.

"The next major topic is energy security. The Ministry of Economic Affairs and Communications is busy mapping out LNG options. We have the decision for the necessary initial investment. Negotiations are underway concerning whether this will be handled by a private company or with state participation. No concrete solutions have solidified as of yet," Aab said.

"Gas and other energy security solutions will help avoid abrupt price hikes next season and help individuals and companies cope," he added.

Lithuania has given up buying Russian gas, with Latvia deliberating following suit. Aab said that having an LNG terminal would allow Estonia to do the same, and that the government feels Russian gas should be given up as soon as possible.

"We are making efforts for it to be practicable. If we can create the LNG capability, we can practically give up Russian gas. We have enough gas for the next few months in storage in Latvia. We should be able to satisfy our own need for LNG by fall at the latest, which is what these proposals are aimed at," Aab said.

Aab said that giving up Russian gas immediately would mean depending on reserves which couldn't be topped up. "The European Union is mapping out a common gas procurement, while that means LNG in our region. If we make these decisions, we will be able to say we are ready to completely abandon Russian gas by fall," he added.

There are different ways for organizing an LNG terminal for Estonia, and Aab also said it would be best to do it with neighbors. "Negotiations have gotten the furthest with Finland. The Latvians have their own plans, while they will not be ready to store LNG by fall. Lithuania's decision means that the LNG arriving in Klaipeda will be mostly for domestic use and the pipeline to Poland. We need to solve our regional problem ourselves," Aab said.

A floating terminal, like the one in Klaipeda, is also being considered, next to constructing a permanent LNG terminal in Estonia.

The economy ministry is set to present the government with an initial LNG solution by Thursday.

"We should create this capacity, irrespective of the readiness of Finland and Latvia to join us. Latvia and Finland are sure to be interested in the gas should the terminal be organized," Aab said.

Center has not given up on excise duty cut

The LNG terminal is one of the biggest things in the supplementary budget.

Aab said that Center has also proposed slashing excise duties, while there is no agreement yet. The Reform Party has made no proposals to mitigate price advance, he remarked.

"We have raised the question of whether we should do something now to alleviate price advance for our coalition partner. Whether concerning people's income or certain taxes, like excise duties," Aab said, adding that negotiations will continue.

The minister added that while work on the budget continues, agreed-upon expenses already stretch into hundreds of millions of euros. According to Aab, Center's additional proposals would require a few dozen million. "Both lowering the excise duties [on motor fuel] to the minimum permitted level and hiking subsistence benefits, regarding which I hope we will reach an agreement. We have also proposed one-off support for people in risk groups – pensioners and large families – to help them cope with price hikes the Ukraine war has only worsened."

The Center Party wants to hike the subsistence benefit from the current €150 to €200. A vaccination benefit of €100 for people in coronavirus risk groups is also being discussed.


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Editor: Marcus Turovski

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