Port of Tallinn and Elering Start Work Together on Preparations for an LNG Terminal

The report on the development of the Estonian gas market released last week by Pöyry Management Consulting identified that one of the fundamental requirements for the successful development of the local gas market is access to the market for alternative suppliers of gas through a liquefied natural gas (LNG) terminal. On 5 December, Port of Tallinn and Elering reached an agreement to work together to build such a terminal in Muuga port.

The agreement was made between Port of Tallinn and Elering in order for the planning process to be started, the environmental impact assessment done and feasibility and profitability studies carried out for the regional LNG terminal.

Elering CEO Taavi Veskimägi says that the LNG terminal is one of the major issues facing Estonia in ensuring security of the energy supply, as is the creation of proper competition in the gas market. “The Pöyry report states clearly that alongside the unbundling of ownership of gas networks, one of the main conditions for free competition in the market will be an alternative route of gas supply and free access to the Estonian market for suppliers, and under current circumstances this is most realistically achieved through a liquefied natural gas terminal,” he explained.

Erik Ringmaa, Chief Commercial Officer at Port of Tallinn, said that the port has looked into building an LNG terminal in either Muuga or Paldiski South Harbour and that the research so far shows that the best place for the terminal is the Eastern side of Muuga port. “As the environmental regulations for shipping of the EU and the International Maritime Organization will be getting even stricter from 2015, we foresee the emergence of demand for LNG in the shipping industry. Port of Tallinn has some of the busiest traffic in the Baltic sea and obviously if we want to maintain our position we need to set up LNG storage facilities”. Ringmaa further explained that they are hoping to unite two projects for LNG storage and for the regional LNG terminal to get the maximum possible synergy from them.

Both Elering and Port of Tallinn are looking for ways to get EU funding for the terminal and are drawing up their projects to meet the EU criteria. Both companies have also declared their willingness to bring other partners into the project if necessary.

The Estonian government has asked Elering to set up a department in the company to specialise in gas and to analyse the possible development routes for the gas market. This May, Elering ordered an analysis of the targets and steps required for the development of the gas market from tender-winner Pöyry Management Consulting (UK) Ltd.

The state-owned Port of Tallinn is one of the biggest cargo and passenger ports on the Baltic sea and comprises five ports: Old City Harbour, Muuga Harbour, Paldiski South Harbour, Paljassaare Harbour and Saaremaa Harbour. Port of Tallinn plans in future to enable ships to fuel up with environmentally cleaner liquefied natural gas in its ports instead of heavy fuel oil.