Veskimägi: Elering could not reach cost-sharing agreement with Finnish side

Elering CEO Taavi Veskimägi.
Elering CEO Taavi Veskimägi. Source: Siim Lõvi/ERR

Elering CEO Taavi Veskimäe said that Elering did not invest in leasing the FSRU, an LNG storage ship with an onboard regassification plant, due to the inability to reach a cost-sharing agreement with Finnish Gasgrid.

The Estonian and Finnish system operators were to develop the terms and conditions for the use of the LNG terminal jointly, but Finland is now solely in charge of the matter.

"Since Elering and Finish Gasgrid did not jointly acquire the FSRU, our role in developing the terms differs from what was first agreed upon in the spring. Gasgrid Finland is the sole owner of FSRU and is working out the terms and conditions that allow market participants to use the terminal," Veskimägi confirmed.

Elering announced in May that, in an agreement with Gasgrid, the costs of renting the floating terminal would be covered jointly, with the costs divided proportionally between Estonian and Finnish gas consumption, i.e. 20 percent and 80 percent, respectively.

According to Veskimäe, Elering did not invest into leasing of the FSRU because it was unable to negotiate a deal with the Finnish counterpart.

"There is no reason to undertake extra investments if it is not even certain that these costs will not be added to the Estonian consumer network price but to the terminal charge," Veskimägi explained.

If the costs were incorporated into the terminal charge, they would be shared by all market participants who used the terminal. If they were included in the network charge, however, the Estonian gas customer would be responsible for them, Veskimägi said.

"We can only become a shareholder and invest further in regional supply security if these costs are borne by the terminal rather than the Estonian gas consumer."

It is up to Finland to determine how to divide these costs, Veskimägi said, without further comment.

"In addition to distributing expenses among consumers in different countries, sellers might opt to absorb a portion of the cost in order to gain a more competitive market position. Gas retailers may bear this expense in order to stay in business in a highly competitive sector," he said.

The directive of the European Parliament states that terminals must be available to all market participants and accessible to third parties. Veskimägi said that the role of the company has been twofold: "Elering has been building the Paldiski terminal pipeline connection, which will be completed soon, and the second goal was to ensure that Estonian consumers have a reliable gas supply. In any case, the security of gas supply in our region for the coming winter is well secured based on the state of gas reserves at the Klaipeda LNG terminal, Latvia's underground storage, and the capacity of the new terminal in Inkoo."

Elering has built the Paldiski infrastructure on the basis of the parameters of a specific regasification vessel to be leased from Finland, the Exemplar.

"If someone else wishes to bring another vessel to the same location, they should first contact Elering and inform us of the vessel's condition and parameters. Then, we could assess the time-frame, conditions and cost of rebuilding the connecting point at Paldiski, so that another vessel could be connected to it," Veskimägi said.


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Editor: Kristina Kersa

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