Overview

The furthest north of the Baltic states, Estonia is hoping to push ahead with long-term plans to build a regional LNG terminal at its northwestern port town of Paldiski, after the European Commission rejected proposals for a two-facility solution this summer.

A project to open up new supply options for the Baltic states –which are dependent on Russian gas – and their northern neighbour Finland needs EU funding, which in turn requires project approval from Brussels.

Debate over where to locate a regasification facility in the region has caused rancour among the four interested countries, with consultants hired to appraise which location would be best. Lithuania has opted to go it alone and will take delivery of a floating vessel to be docked at the port town of Klaipeda later this year, while Latvia appears to have fallen out of the running.

The Estonia/Finland agreement included a plan for the creation of two 160,000 cubic metre capacity projects linked by an undersea pipeline. A study commissioned by the Estonian government in 2013 found that Paldiski was the best location regionally in terms of navigation, but that the exact location had little impact on market factors.

The EU's list of Projects of Common Interest, published in October 2013, includes a provision for a Baltic facility. The Estonian option, backed by holding company Alexela, and the Finnish alternative planned for Inkoo by integrated gas company Gasum look to be the finalists. The cost of building an LNG project is expected to be around €500 million ($668 million).

A pipeline interconnector between the Finnish and Estonian networks is also in development across the Baltic Sea. Finland’s Gasum and Estonian transmission system operator Võrguteenus submitted proposals to the EU in June and are awaiting a response on the ‘Balticonnector’ project.

Page updated: 14/08/2014