Estonia considering giving Alexela, Infortar and Elering guarantees

LNG terminal dredging work.
LNG terminal dredging work. Source: Alexela/Infortar

The government could give guarantees to LNG terminal developers Alexela and Infortar, as well as grid operator Elering for the process of renting a floating storage and regasification unit (FSRU), mooring infrastructure and pipeline.

Alexela said that an FSRU cannot be leased before there is certainty of a pipeline connection, while Elering, as the project participant in charge of the latter, claims it cannot take the risk of constructing the necessary length of pipeline without assurances from Alexela and Infortar.

Alexela has launched constructing on LNG mooring infrastructure in Paldiski. The company promises to complete the mooring quay by September, while developers Alexela and Infortar want written confirmation from Elering that the grid link will be completed by late November.

"While we could lease it, the risk of the FSRU just floating there unable to connect to the grid is too great for the private sector. Because the government has promised to construct that link, we would like a date of completion to be able to ensure supply security by fall at the optimal cost level," Alexela board member Marti Hääl said.

Elering said it is ready to start building the pipeline link, while Alexela and Infortar should sign a grid connection agreement first.

"We need a connection agreement that includes the parameters of the ship. A link can only be built if you know what you are linking to, and it matters to us to know that Alexela and Infortar are willing to bear the cost," Elering CEO Taavi Veskimägi said.

Elering also does not want to assume full responsibility for a completion deadline as it might depend on components ordered from international markets, which is by no means guaranteed, for example, in the case of China. Veskimägi said that in a situation where neither side is willing to take risks, the government needs to step in.

"Concerning risks neither company is willing to bear, the government can step in assume the intermediate risk. In other words, that it is willing to compensate Alexela and Infortar for the FSRU lease expenses should the pipeline connection not be completed in time," the Elering CEO explained.

The government is considering providing a guarantee to manage risks.

"It is being discussed, and if an agreement can be reached, it is what we will be taking to the government," Minister of Economic Affairs and Communications Taavi Aas (Center) said.


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Editor: Marcus Turovski

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