Developer: LNG terminal negotiations should not happen via press releases

Heiti Hääl.
Heiti Hääl. Source: Simo Atso

Heiti Hääl, chairman of the supervisory board of Alexela, admitted that the company has been in talks with the government for two months while progress is slow, adding that gas transmission system operator Eelering and its Finnish counterpart Gasgrid are busy outbidding private companies.

Hääl admitted on the Vikerhommik morning show that he has to hear about the government's plans for Estonia's LNG terminal via the press.

"I'm an old-fashioned person and find that if two sides want to agree on something, they will meet and sit down together. But talks happening via press releases is an unknown form of communication for Alexela, nor can I see it as effective. We have been in talks for two months, while progress has been slow," Hääl said.

He explained that Alexela has been working on LNG capacity since 2009. The company has conducted studies and met conservationists in court for the construction rights for the mooring quay and terminal.

"We need to lease a floating terminal for the first two years. This will require a mooring quay to be built in Lahepere Bay. That in turn required changes to the project that have been made by now. We believe we will secure the construction permit from the local government this week. We have the contracts and materials. I believe we can have the equipment out there and start construction within a week," he said.

Next comes linking to the Baltic gas network that should be handled by Elering.

"I cannot say whether they will do it and when. The other thing is the floating terminal itself that we tried to find working together with Infortar. There are a total of 17 suitable vessels. While there are over 50 FSRUs in the world, because all use seawater to warm the gas, most of them are meant to operate in warmer areas."

Suggesting that such vessels are in demand today would be an understatement, Hääl suggested, adding that owners are in a perfect position today as the war in Ukraine has given them an incredible market.

"Leasing prices have tripled in the last two months, with owners asking what they want. By now, we find ourselves in a situation where Elering and its Finnish counterpart Gasgrid are outbidding private companies. It is clear without saying that we cannot match the public budgets of Estonia and Finland."

Inflation to hit 25 percent by fall

Hääl explained that there is more supply than demand for LNG today. Alexela has been in touch with ten suppliers and availability is not the problem. What is the problem is the fact that the LNG trade has long-term contracts and time for signing them is running out.

The businessman believes that a single new terminal to complement the one in Klaipeda would be enough to cover Baltic and Finnish demand.

"I cannot see Europe giving up Russian gas in under two years," he also said.

Talking about the price of gas, Hääl admitted that additional supply should drive prices down. "Things might be better next winter compared to last one," he said.

A decision by Europe to drop Russian oil altogether would hike prices in the region.

"With inflation at 19 percent in April, I believe we will see 25 percent by fall," he predicted.


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Editor: Marcus Turovski

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