Es­to­nia to likely sup­port Alex­ela in Pald­iski LNG ter­mi­nal dis­pute


Es­to­nia is to likely sup­port Alex­ela in the lat­ter's dis­pute with the Euro­pean Com­mis­sion in con­nec­tion with the Com­mis­sion‘s de­ci­sion not to sup­port build­ing the liq­ue­fied nat­u­ral gas (LNG) ter­mi­nal in Pald­iski. Ac­cord­ing to the Min­istry of Eco­nomic Af­fairs and Com­mu­ni­ca­tions, Lithua­nia's Klaipeda ter­mi­nal does not en­sure the al­ter­na­tive gas sup­ply re­li­a­bil­ity.

Es­to­nia wants to get in­volved in the court dis­pute in the frame­work of which Alex­ela's sub­sidiary Balti Gaas has brought an ac­tion against the Euro­pean Com­mis­sion in con­nec­tion with the de­ci­sion made by the In­no­va­tion and Net­works Ex­ec­u­tive Agency (INEA) in Fe­bru­ary to not sup­port the Pald­iski LNG ter­mi­nal project with 344 mil­lion eu­ros, or 39 per cent of the to­tal cost of the project. Alex­ela wants to have the de­ci­sion de­clared void and the money to be al­lo­cated.

Es­to­nia does not agree with the es­ti­ma­tion of INEA and the Com­mis­sion, ac­cord­ing to which Klaipeda's LNG ter­mi­nal is an equal al­ter­na­tive to an LNG ter­mi­nal which would be built in the re­gion on a per­ma­nent ba­sis in re­gard to long-term gas sup­ply as well as di­ver­si­fy­ing sup­ply sources. There­fore Es­to­nia is get­ting in­volved in the court dis­pute to sup­port Alex­ela's po­si­tion that the LNG ter­mi­nal in Klaipeda does not en­sure the gas sup­ply nor the di­ver­sity of gas sup­ply in the long term.

Klaipeda's LNG ter­mi­nal, which is the only re­gional al­ter­na­tive to Gazprom gas, has been built as a tem­po­rary so­lu­tion with the changes in the Lithua­nian en­ergy sys­tem kept in mind. The float­ing LNG ter­mi­nal in Klaipeda opened at the end of 2014 was built in or­der to get a bet­ter po­si­tion in the gas price talks with Gazprom. The ter­mi­nal is not sta­tion­ary and it is used ac­cord­ing to an op­er­at­ing agree­ment which is in ef­fect un­til 2024. It is not known what the fu­ture of the ter­mi­nal will be af­ter the agree­ment ex­pires. There­fore, there is no guar­an­tee that af­ter 2024 there will be an al­ter­na­tive to the gas sold by Gazprom, the Es­to­nian min­istry says.

Alex­ela filed a fi­nanc­ing ap­pli­ca­tion with the Con­nect­ing Euro­pea Fa­cil­ity (CEF) in Oc­to­ber 2015 for 344 mil­lion eu­ros. The com­pany had al­ready in­vested around 10 mil­lion eu­ros in the project by then. Alex­ela has been de­vel­op­ing the LNG ter­mi­nal project as of 2007.

The fi­nal in­vest­ing de­ci­sion for launch­ing the con­struc­tion of the Pald­iski LNG ter­mi­nal is on hold un­til con­sul­ta­tions be­tween prime min­is­ters of the three Baltic coun­tries and Alex­ela and Klaipedos Nafta re­gard­ing the EU co­fi­nanc­ing of the re­gional im­port ter­mi­nal will end.

In ad­di­tion, a co­pro­duc­tion plant is planned to be built in Pald­iski which, in ad­di­tion to sup­ply­ing the LNG ter­mi­nal with heat and elec­tric­ity, would cre­ate a po­ten­tial for car­ry­ing out en­ergy in­ten­sive in­dus­trial in­vest­ments in Es­to­nia in the fu­ture Pald­iski en­ergy commune.

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