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.