Still unclear who is renting floating LNG terminal in Paldiski

Construction underway on the planned LNG terminal in Paldiski.
Construction underway on the planned LNG terminal in Paldiski. Source: Siim Lõvi/ERR

Construction is already underway on the new LNG terminal near Paldiski, and the mooring quay is slated to be completed by the end of August already. Alexela confirmed that LNG reception capacity will be established in early November. It still remains unclear, however, whether private investors Alexela and Infortar or the Finnish state will be the ones to rent the necessary floating storage and regasification unit (FSRU).

A Belgian dredger arrived at the tip of Pakri Cape on Tuesday, where it began preparatory work for the construction of a mooring quay in the coastal sea there. Also underway are test pile works.

According to Alexela board member Marti Hääl, the company is currently on track, as initially planned, to complete the mooring quay by the end of August, which it will then hand over to electricity and gas system operator Elering for the installation of a gas pipeline and equipment.

"The goal is still to be done by November 1," Hääl said.

The LNG reception capacity currently being built in Estonia will be similar to that of Lithuania, where LNG delivery is ensured by the FSRU Independence in Klaipeda. The FSRU, in turn, is supplied by regular LNG tankers.

Who will be bringing the FSRU to Paldiski, however, still remains unclear.

"We're in negotiations regarding a ship, and actually we know that the Finns are as well," Hääl said. "We'll have to agree here soon regarding which of these ships will be coming here this fall."

"We're actually waiting for the Finns' response regarding whether they will agree to this ship being located there, and under what conditions," explained Minister of Economic Affairs and Infrastructure Taavi Aas (Center). "And of course, whether the private sector obtains its own ship or not will depend on this."

The Estonian government is not 100 percent sure whether private investors will manage to build the necessary LNG reception capacity in time, which is one reason why the state is purchasing its own natural gas reserves.

"Each construction is complete once its building permit is issued," Aas explained. "And we're still taking into account that the entire process is actually, as both sides have acknowledged, a world record — nothing has ever been built so quickly before. A lot of questions still remain, and naturally it's reasonable as a result to have a guaranteed supply."

Prime Minister Kaja Kallas (Reform) likewise expressed concern.

"Regarding LNG, the private sector stepped in to say that they'll get it all done themselves," Kallas said. "Personally, I'm very afraid that this is the type of project where, come winter, they'll say 'You know, we can't handle this by ourselves after all,' and will then ask for some kind of enormous support from the state. But right now they've said that that won't be the case, that the private sector is prepared to do this themselves."

Hääl remains confident in Alexela's capabilities. "We are sure about our own part, but we're not sure about whether Elering can manage its task," he said. "But we very much hope that they will live up to their words."

Port owner: North Port better location for floating terminal

Meanwhile, Paldiski Sadamad AS, the owner of Paldiski North Port, sent members of the Estonian government an appeal in which it stated that the North port would be a more suitable location for a floating LNG terminal than the terminal being built by Alexela at the tip of the Pakri Peninsula.

Paldiski North Port. Source: Paldiski Põhjasadam AS

In the letter, Paldiski Sadamad AS supervisory board chairman Aleksei Mürisep said that Paldiski North Port could immediately accommodate an FSRU, thus making it possible to ensure Estonia's gas supply by November 1.

He noted that Paldiski North Port provides the fastest maritime connections with Sweden, Finland and the rest of Europe and underscored that the port is naturally deep and ice-free year round.

"Paldiski North Port is the safest, fastest, cheapest, surest and most logical location for Estonia's floating LNG terminal, with which it would be possible to ensure Estonia's security of gas supply in the near future," the letter reads. "The owner company of the floating LNG terminal has confirmed that the port is fully suitable for a floating terminal."

Mürisep said that in the current market situation, the accelerated construction of a new quay would be expensive and still may not be completed in time.

Among other concerns, he also believes that Alexela's offered location at the tip of Pakri Peninsula is unsuitable and essentially located out on the open sea.

"To our knowledge, the owners of floating terminals do not permit them to remain hooked up to gas lines over a certain wave height ⁠— 0.7 meters ⁠— which would mean that the terminal would have to stop working and move to a roadstead further from the shore," the letter reads. "During this period, Estonia's gas supply would be halted. It seems to us as though this fact has not been taken into consideration in current proposed solutions. Such calls dictated by ship safety are made by the captain and the owner of the floating terminal; the Estonian state cannot dictate anything on this front."

The port owner finds it unlikely that all of the necessary infrastructure can be completed by the November 1 deadline.

"On top of that, the rapidly planned floating terminal is located in a Natura 2000 nature protection area; an environmental impact assessment has not been conducted," it added.

Paldiski Sadamate AS is proposing that the Estonian state "consider the opportunity to use the existing and safe Quay Number 7 at Paldiski North Harbor as the location of the floating LNG terminal. If necessary, the port is prepared to scale back all other port activities in order to ensure the full safety of the terminal."

Should the state choose to go this route, all that would be necessary to do is build a few kilometers' worth of pipeline on land to connect it with the BalticConnector pipeline, Mürisep said.

"We already have the necessary technical draft solution, and construction of such a land pipeline is fast and cheap," he highlighted. "As the pipeline is being built, the transport of containerized LNG to BalticConnector can be arranged. The quay can start being used immediately; it's already complete."

According to Mürisep, however the port owner's letters regarding its North Port have yet to receive responses.


Follow ERR News on Facebook and Twitter and never miss an update!

Editor: Aili Vahtla

Hea lugeja, näeme et kasutate vanemat brauseri versiooni või vähelevinud brauserit.

Parema ja terviklikuma kasutajakogemuse tagamiseks soovitame alla laadida uusim versioon mõnest meie toetatud brauserist: