Minister: Stalled LNG talks to resume next week

Economics affairs minister Taavi Aas (left) with Elering boss Taavi Veskimägi.
Economics affairs minister Taavi Aas (left) with Elering boss Taavi Veskimägi. Source: Siim Lõvi /ERR

Economics minister Taavi Aas (Center) says negotiations will continue next week, after talks between state grid distributor Elering and two private sector firms, on a proposed Liquefied Natural Gas (LNG) floating terminal aimed at helping to end dependency on Russian natural gas, stalled.

Aas said Friday afternoon that: "We can't announce any good news to the effect the issue has been resolved today. Both sides were left with some homework to do, and we will reconvene in the new week."

Aas dispelled rumors that the two private sector firms involved, fuel retailer Alexela and investment firm Infortar, have not been "thrown under a bus" in the course of the negotiations.

He said: "The sole option for the LNG reception capacity is this berth, whose developers are Alexela and Infortar," referring to the planned terminal at Paldiski.

One of the main sticking points revolved around a demand on the part of Alexela and Inforatar that Elering grant them 1 Twh of usable capacity per month, which, Elering's CEO, Taavi Veskimägi, says would contravene both domestic and EU regulations.

Veskimägi said: "This would [also] put other participants in the gas market in an unequal position. "And third, it is not something which Elering can or should do."

Aas met with Alexela and Eesti Gaas (Infortar's owner) representatives, along with those of Elering, on Friday.

Veskimägi maintains that his company is seeking compromise and has submitted proposals on conditions by which it can acquire, lease or sell the pipeline to private companies.

A pipeline would link a floating LNG terminal, a ship fitted out for the purpose, while the LNG would be linked to the natural gas existing domestic network; the vessel can also be located on the Finnish side of the gulf if need be.

While the LNG facility is still planned to be operational in the fall, the urgency arising from Russia's invasion of Ukraine and a need to decouple from dependency on Russian natural gas, Aas said that other options will continue to be developed in tandem, lest the LNG terminal not be ready in time.

Any ensuing shortages of natural gas would hit industry harder than domestic consumers, Aas added.

The state plans to acquire 1TWh of natural gas reserves (the average domestic consumption per year is around 1TWh).

Both Elering and Alexela/Infortar said that no solution had yet been reached.

Infortar's board chair, Ain Hanschmidt, also said that a solution was desired.

He said: "The Ministry of Economy has now taken on a greater role, and I think we have taken things a step further."

Hanschmidt added that Infortar was not trying to obtain any advantage. "We want a level playing field," he said. 

Infortar's parent company, Eesti Gaas, sells 12TWh of gas per annum, he noted.

Alexela manager Marti Hääl said that "Everyone received their 'homework' and will come back with their results next week," he added, noting that the company requires details on the construction of the terminal – for instance time-scale, type of vessel etc.

Earlier in the week, Elering and Finnish operator Gasgrid Finland inked a deal to jointly lease the planned LNG terminal.


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Editor: Andrew Whyte

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