Vopak LNG chosen as strategic partner for Tallinn liquefied natural gas terminal project

Elering and Tallinna Sadam have chosen Vopak LNG, a LNG focussed subsidiary of the world’s leading independent provider of conditioned storage facilities for bulk liquids Royal Vopak , as their international strategic partner for the liquefied natural gas (LNG) terminal planned at Muuga Harbour.

On May 2nd, 2012 Elering and Tallinna Sadam signed a Letter of Mutual Intent with Vopak LNG, in which the Parties express their mutual willingness to start a feasibility study comprising of the technical and economic parameters, the cost of construction and the need for European Union funding for the Tallinn LNG terminal to be developed at Muuga Harbour.

The work group consisting of Tallinna Sadam and Elering has been concentrating on choosing a partner since the beginning of this year. According to the agreement between Tallinna Sadam and Elering, the partner chosen must have experience in establishing and operating LNG terminals in Europe, they must be independent of vendors and producers of natural gas to ensure open access to the terminal.

According to Elering’s natural gas business developer Janek Parkman, the defining factor in choosing Vopak LNG is their global competence in developing and operating (LNG) terminals their independence from vendors and producers of natural gas and their readiness and interest to contribute to the development of the Tallinn LNG terminal at Muuga Harbour. “Vopak LNG has experience in establishing and operating the largest LNG terminal in Europe: the GATE terminal in Rotterdam, which makes Vopak LNG the most considerable strategic partner for the developers of LNG terminals in the region of the Baltic Sea,” explained Parkman.

Taavi Veskimägi, the Chairman of the Elering Board, says that establishing a strong regional LNG terminal in Estonia is key to enhancing competition in the local natural gas market. “In developing the LNG terminal, Estonia complies with the principles of European Union directives on natural gas, which state that the ownership and administration of energy infrastructures must be kept separate from producing and selling energy.”

Dirk van Slooten, Global Director of Vopak LNG , said that the objectives of Vopak as independent owner and operator of terminals are well suited to the objectives of the Tallinn LNG project. “Our mutual objective is to develop in Estonia an open access LNG terminal with transparent user terms and conditions in compliance with the needs of the market. We are able to offer our experience and contacts to achieve this objective.”

Erik Ringmaa, Chief Commercial Officer at Tallinna Sadam said that having Vopak as a partner will assure all parties that the terminal to be built will be technically perfect and in compliance with all current safety and environmental requirements. “We believe that building the LNG terminal in Muuga will significantly contribute to a cleaner environment of the Baltic Sea. LNG, as environmentally clean fuel, has started to replace existing bunker oils regarding the strict environmental terms that will be implemented by 2015. In addition to that, Muuga’s strategic location near important waterways provides opportunities for ships to be refuelled.”

The LNG terminal is part of the concept of developing the regional and Estonian gas market, developed in cooperation with consulting company Pöyry Management Consulting Ltd (UK) last year. The prefeasibility study is compiled by Ramboll Oil & Gas Ltd. At the same time cooperation with Estonian universities in seeking further potential for the use of natural gas continues.

The short-term objective of the Letter of Intent entered into by Elering, Tallinna Sadam and Vopak LNG is to clarify the feasibility of establishing an LNG terminal in Tallinn, at Muuga Harbour. The results of the study are expected to be presented in August 2012 to the Natural Gas Committee at the Ministry of Economic Affairs and Communications. This study is also useful to convince the European Commission of the suitability of the Tallinn LNG terminal project as a terminal supplying the whole of the Baltics and Finland. In the past the European Commission has reported that it will support the development of the LNG solution in the Baltics on the condition that it is able to cover at least 25% of the consumption of the entire region.

Vopak LNG Holding B.V. is a 100% subsidiary of the Dutch company Royal Vopak (Koninklijke Vopak N.V.) with a history dating back 400 years. Royal Vopak is the world’s leading independent provider of conditioned storage facilities for bulk liquids. Its shares are quoted on the Amsterdam Stock Exchange. Vopak LNG specialises in handling liquefied natural gas by owning and operating LNG terminals in Rotterdam, The Netherlands and Altamira, Mexico.

Elering AS is Estonian transmission system operator, whose primary task is to ensure a constant high-quality electricity supply to the Estonian consumer and to ensure the security of the energy supply. In order to achieve the best possible security of energy supply in Estonia, the development of the electricity and gas industries must be linked to developing Elering as the integrated administrator of electricity and gas systems.

AS Tallinna Sadam is the largest complex of cargo and passenger ports in Estonia, that plays an important role in Estonian transportation system and in the economy as a whole. AS Tallinna Sadam consists of five harbors: the Old City Harbor, Muuga Harbor, Paldiski South Harbor, Paljassaare Harbor and Saaremaa Harbor. Last year a total of 8.48 million passengers passed through the harbours of Tallinna Sadam, the volume of cargo amounted to 36.6 million tons.