Estonia's Paldiski LNG terminal rent €300 a year, compared with €6 million

Marine loading arm base of the Paldiski terminal.
Marine loading arm base of the Paldiski terminal. Source: ERR

Ground rent at the newly build Liquefied Natural Gas (LNG) terminal at Paldiski would cost national grid operator Elering €299 per year, as opposed to €6 million per year being demanded by two private sector firms, should Elering obtain possession of a gas pipeline connection at the facility.

Elering has applied to Lääne-Harju Municipality to impose forced possession of the connecting pipeline.

Pakrineeme Sadam (Pakrineeme Port), jointly owned by fuel retailer Alexela and holding company Infortar, issued its first monthly invoice for €500,000 rent (ie. 12*€500,000 = €6 million), just before Christmas.

The process by which Elering might obtain forced possession, even if successful, may be a lengthy one, however.

Elering stated in its application to Lääne-Harju Municipality that it had been trying to come to an agreement with Pakrineeme Port on the matter for six months already.

"Elering has thoroughly assessed the situation, and has come to the conclusion that reaching an agreement with the owner of the properties, to establish a personal right of use, will not be possible," the application states.

"The properties owner must therefore be obliged to bear the built-in technical facility (overriding) public interests, by establishing forced possession," the application goes on.

Lääne-Harju Mayor Jaanus Saat (Ühendus electoral alliance) said: "Based on previous experience, if a compromise is not found, forced possession will be imposed, meaning the whole process will be protracted. One party that does not agree with it will go to court to challenge it, which will prolong this process."

Saat said that the municipality would prefer not to impose forced possession, for this very reason, and expressed a hope the two parties would come to an agreement.

Saat added that the €299 per annum covers two objects, with maintenance fees of €194.25 and €104.75 respectively.

Lääne-Harju Municipality on Thursday notified Pakrineeme Sadam of the commencement of the forced possession process, as requested by Elering, Saat continued.

Pakrineeme Sadam has a month in which to respond to this notification.

Saat noted that while Elering applied for a permit for use at the end of last year, this cannot be satisfied at present, on the basis of incomplete documentation submitted.

This documentation needs to include an agreement with the landowner – ie. Parkineeme Sadam, as well as other missing items, Saat said, adding that he assumed Elering were in the process of putting together the latter.

Elering announced Wednesday that Pakrineeme Sadam, which constructed the LNG berth at Paldiski, had issued a request for monthly rent of €500,000, starting from November last year.

Sworn advocate Jaanus Mody, acting for Pakrineeme Sadam, called Elering's actions "embarrassing", adding that paying the €500,000 was the minimum Elering could do, and that his client would likely commence legal action were this not to materialize.

The facility in question consists of a connecting pipeline which links the LNG terminal, in turn connected via a ship-to-shore pipeline to an LNG-bearing vessel, to the national gas network.

No LNG vessel is currently in port, though a ship did recently arrive at Inkoo, Finland, and will be able to supply Estonia with LNG via the Balticconnector pipeline.

Other options include the Klaipeda LNG terminal in Lithuania.


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Editor: Andrew Whyte, Huko Aaspõllu

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