The Estonian government has decided to focus on the Paldiski liquefied natural gas (LNG) terminal in North West Estonia as its choice for the Finland and Baltic states' regional LNG terminal, Postimees Online reports.

So far the Estonian economy ministry has said that out of the three LNG terminal projects in consideration now, the European Union support should go to the best one. These three are Gasum's project in Finland, Elering's project in the Port of Tallinn and Alexela LNG terminal plan in Paldiski.

Postimees has information that last week, agreements were concluded that give the government's full support to the Paldiski LNG terminal and Elering's Port of Tallinn plan steps out of the game. In the latter project, large international terminal manager Royal Vopak was participating; its subsidiary Vopak EOS has already an oil terminal in Muuga. Presumably Alexela should now find a way for cooperation with Vopak in order to develop the LNG terminal. Elering should also come to play partially.

"The advantage of Paldiski is readiness to design the shareholders structure that is agreed upon in advance - main grid operators of all interested states can participate in the terminal," noted economy minister Juhan Parts. That can only happen if the grid companies are separated from gas sellers. That is not the case in Finland while in Baltic states the process is under way.

Parts added that he thinks that Alexela and Royal Vopak could cooperate about the LNG terminal.

The exact business model is not yet known but Parts aid that it is important that in Paldiski, the developer is ready to spend private money, thus the EU support can be smaller.

Since building an LNG terminal is very expensive, the price reaching to around 500 million euros, it is impossible to make the investment without EU funding. The choice between Estonia and Finland should be made by May when the European Council meeting dedicated to energy issues should take place in Brussels.

While Finland's position at the talks is strong since gas consumption in Finland is several times higher than in Estonia, Estonia decision-makers dont want to give up the investment without a fight either.



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(Originally published March 18, 2013, by LETA.)