Study: Tallinn LNG Terminal Is Cheapest Option for Ensuring Regional Security of Gas Supply

The Danish consulting company Ramboll Oil & Gas A/S has finalised a preliminary feasibility study of the Tallinn LNG terminal project, developed at the port of Muuga. According to the study, the total investment required to construct the Tallinn terminal would be approximately one third less than the cost of creating a similar terminal in any other location. The purpose of the planned terminal is to ensure the security of supply in the Baltic States and Finland, which are currently dependent on a single gas supplier, as well as to satisfy commercial demand. The study was commissioned by the developers of the terminal project: Elering, Port of Tallinn, and Vopak LNG.

The developers have chosen the east side of the port of Muuga as the location of the LNG terminal, enabling it to use the existing port infrastructure. According to the study, the cost of constructing the described terminal is 221 million euros, plus an investment of up to 10 million euros to connect the terminal to Estonian gas transmission network. The implementation of the terminal project is estimated to take four years, including two years of construction work.

Taavi Veskimägi, the CEO of Elering, said that according to the preliminary feasibility study the creation of a regional LNG terminal in the Tallinn area provides a number of advantages over other potential locations within the upcoming joint Finnish-Baltic gas market and together with the planned Finnish-Estonian gas interconnection, Balticconnector, the terminal would be conveniently placed into the gas network. „The terminal’s location in the Tallinn area would help bring the security of gas supply in Estonia up to the EU’s required levels, as well as contribute to the development of Finnish gas via Balticconnector,“ Veskimägi said.

By a conservative estimate, a third of the financing of the terminal’s construction will need to be provided by investment grants from the European Union, in order to ensure the project’s financial stability and avoid placing an excessive burden on gas consumers. The Tallinn LNG project is a candidate for the EU Project of Common Interest (PCI), as it matches the approved assessment criteria for receiving EU aid.

The design of the Tallinn LNG terminal includes a storage facility capable of holding 90 000 cubic meters of LNG, and the ability to receive ships of up to 75 000 cubic meter capacity. The terminal will be capable of releasing nine million cubic meters of natural gas per day, and will also include facilities for ship bunkering and truckloading. The terminal’s capacity can be significantly increased at the selected location if additional demand arises.

In addition to current consumers, the terminal will enable the supply of gas to companies that do not have a connection to the gas grid. Such customers like district heating boiler houses or road transportation companies can receive deliveries of LNG by tanktrucks. The terminal will also offer LNG for ship bunkering, as natural gas will become a serious and viable alternative shipping fuel from 2015, when ECA regulations will apply to the Baltic Sea.

Ramboll’s recommendation to the Elering, Vopak and Port of Tallinn workgroup is to initiate a full scale feasibility study, market study and financing negotiations within the next year, and to begin signing preliminary agreements with the potential suppliers of security of supply. The process of environmental impact assessment and planning should also be initiated.