Estonia drops plans for stake in Finnish LNG terminal

Market: Natural gas
03/11/22

The Estonian government has decided to give up on acquiring a stake in the Finnish LNG terminal, and to instead buy the mooring quay at Paldiski.

"At today's cabinet meeting, the ministers decided to abandon the acquisition of a stake in the Finnish LNG terminal" operated by Gasgrid Finland's subsidiary Floating LNG Terminal Finland Oy, the Estonian government said today.

Estonia and Finland previously signed a co-operation agreement stating that the floating storage and regasification unit (FSRU) Exemplar, wholly rented by the Finnish side, will be moored at whichever terminal — either Paldiski in Estonia or Inkoo in Finland — is finished first. But last month, the Estonian and Finnish economy ministries confirmed that Exemplar will be moored at Finland's Inkoo port, while the Finnish side suggested that Estonia would have to buy a stake in the LNG terminal before getting preferential access to it.

Around €30mn has been allocated for the Estonian system operator Elering to participate in the joint project with Finland. This will be used to buy additional gas volumes, said the minister of economy and infrastructure Riina Sikkut.

"There is a possibility under discussion that the first gas cargo arriving to the LNG floating terminal will be offered primarily to the holders of strategic reserves in Estonia, Finland and Latvia. If the price... is good, the conditions are suitable and the purchase increases the supply security of the Estonian market, then it is reasonable to use the opportunity," Sikkut said.

The FSRU at Inkoo is scheduled to receive its commissioning cargo in mid-December, according to the Finnish system operator Gasgrid.

But the Estonian government instead instructed state-run gas stockpiling agency ESPA to buy the mooring quay at Paldiski from construction firms Alexela and Infortar, which according to the country's prime minister Kaja Kallas is "an important" project for Estonia's energy security.

Following today's decision, construction firms will be able to sell the quay to the state "if they wish, even from this year", Kallas said.

Estonia will pay the "proven costs incurred by the developer for the quay this year, the upper limit of which is €30mn", according to Sikkut. "In total, the transaction will cost up to €38mn... and this amount has already been allocated by the government to the gas stockpiling agency ESPA," Sikkut said.

Construction works at Paldiski were completed in late October.

By Eleni Charisi

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