Minister: Several ways to provide LNG terminal developer with guarantee

FSRU Independence at port in Klaipėda, LIthuania. A similar LNG vessel may be planned for Estonia.
FSRU Independence at port in Klaipėda, LIthuania. A similar LNG vessel may be planned for Estonia. Source: AB Klaipedos Nafta / CC BY-SA 4.0 / Wikimedia Commons

Minister of Economic Affairs and Infrastructure Taavi Aas said that the government has different guarantees it can offer Alexela that is looking to build an LNG terminal in Estonia.

The minister said that two negotiations are underway. One with Finland for leasing a floating storage regasification unit (FSRU) and the other between Alexela and Estonian grid operator Elering.

Aas described as understandable Alexela's request for government guarantees that would not leave it dependent on future political decisions.

"The negotiations are revolving around how to give the private investor (Alexela) certainty that they will be in the black once they construct the mooring infrastructure. There are several possibilities. Elering is willing to buy the mooring quay outright. The other side proposed a rental agreement or the possibility of a buyout should the quay fall out of use to work as a guarantee," Aas told ERR.

Alexela has also asked for a guarantee the government will not change its mind on no longer buying Russian gas. Aas said that while Estonia has decided to stop buying Russian gas, it is important for other market participants in the region to follow. "This would give us certainty that availability of LNG would depend solely on the market in the future. We will have that guarantee," Aas said.

Talks are underway for leasing an FSRU together with Finland, which the latter will procure even should they fall through, Aas said, adding that a joint procurement between Estonia, Finland and Latvia – that recently said it would be joining the effort – would be considerably cheaper for everyone.

The minister said both talks should be concluded by late April as any further delay could jeopardize the goal of having a floating terminal operational by next fall. Should the worst-case scenario manifest, €170 million has been earmarked in the state budget for emergency purchases.

Deputy Secretary General Timo Tatar has told ERR that Estonia's supplementary state budget has €30 million for the terminal project of which €10 million would be spent on leasing the FSRU. Constructing the mooring quay is estimated to cost €20-30 million.


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Editor: Marcus Turovski

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