Paldiski LNG Terminal

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Paldiski LNG Terminal is a proposed LNG terminal in Estonia. (Some sources have the project misspelled as "Padalski".) As of July 2024, there have been no updates on the project in over two years, and it is presumed to be shelved.

Location

The map below shows the location of the project, in Paldiski, Harju County.

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Project Details

• Owner: Balti Gaas
• Parent: Alexela
• Location: Paldiski, Harju County, Estonia
• Coordinates: 59.38445, 24.07494 (exact)
• Capacity: 1.8 mtpa, 2.5 bcm/y
• Cost: €400 million (US$456 million)
• Financing:
• Status: Shelved
• Type: Import
• FID Status: Pre-FID
• Start Year: 2025

Note: mtpa = million tonnes per year; bcfd = billion cubic feet per day

Background

Paldiski LNG Terminal is a proposed liquefied natural gas (LNG) regasification terminal in Estonia. The project would be built by Balti Gaas, a subsidiary of Estonian company Alexela Group.

In February 2017, the EU denied Alexela's application for a grant of about $400 million for the project from the European Cohesion Fund. Alexela announced that it planned to continue pushing forward with the project anyway, using private capital.

In October 2018 Alexela and Tallinna Sadam signed a memorandum of understanding (MOU) to jointly develop a proposal for an LNG terminal.

There appears to be a certain amount of competition between this proposal, the Lithuania's Klaipeda LNG Terminal, and the Tallinn LNG Terminal for EU endorsement and funding. According to Food and Water Europe's profile on Estonian gas, "These two projects [the Tallinn Terminal and the Paldiski Terminal], have not been accepted in the third Projects of Common Interest list but both applied as candidates for the 4th list. The Commission seems to only support one project in the region leaving it up to the Baltic states to decide on which will be their priority project. It is clear that a new LNG terminal such as this would need financial support from the EU. This support would potentially have to be really significant, as conceived by the Paldiski LNG terminal project operator who warned that the infrastructure could only be built if the European Commission was covering 43% (around €150 million) of the €344 million needed. However, an application by the Paldiski LNG project promoter for EU funds under the [Connecting Europe Facility] was denied in 2017. Other developments make plans to add new LNG capacities seem even less reasonable: the Lithuanian LNG terminal which is already able to supply Estonia and Latvia with gas, was planned to be leased until 2024. The Lithuanian government approved the terminals acquisition after 2024 in 2018, which makes it clear that these import capacities would be available beyond 2024 if necessary."

In May 2019, Estonian media reported a senior Alexela official commenting that the terminal could start operating in 2025, and that projected construction costs were estimated at €300 million.

The project features as a 'Priority Project' on the website of the Three Seas Initiative, a forum of 12 EU member states which has an associated Investment Fund set up to catalyse investments in the energy, transport and digital sectors of the participating countries. The project entry for the Paldiski LNG Terminal states that construction is planned for the 2021-2024 period, with completion by 2025. The project budget is stated as €400 million, with financing sources "To be determined". As of May 2021, the project description states: "All requisite planning and FEED [front End Engineering Design] is completed, all building and environmental permits have been obtained. On-site preparatory works of infrastructure have started."

The project was not included in the November 2021 publication by the European Commission of the 5th PCI list.

In March 2022, amidst the Russia-Ukraine war, Upstream reported that the Estonian government was "analysing the options on how to replace Russian gas," and that the chartering and installing of a floating storage and regasification unit offshore of Paldiski was being explored. The timeline for taking a decision on the project was unclear and, according to a spokesperson from the Ministry of Economic Affairs & Infrastructure, no details of the plan would be disclosed before all necessary decisions were made. The construction of either the Paldiski FSRU Terminal or the onshore terminal would appear to be dependent on Estonia deciding to stop importing Russian fossil gas, according to Taavi Veskimägi, the CEO of Estonia's electricity and gas system operator Elering. Veskimägi pointed out that if gas continues to enter the Baltic region from Russia, then the Incukalns Underground Gas Storage facility in Latvia will continue to be filled in order to ensure sufficient supply for winter 2022.

In April 2022, as efforts were stepped up to implement the Paldiski FSRU Terminal in time for the end of the year, Alexela confirmed that the floating terminal would be the first phase in the wider effort to build a "permanent solution for the terminal" in the second phase. In a TV interview in May 2022, Alexela board member Marti Hääl further confirmed that the company's plan was to build a permanent onshore LNG terminal, and said, "We hope to get it done in two, or a maximum of three years."

As of July 2024, there have been no updates for the onshore Paldiski LNG Terminal in over two years, and the project is presumed to be shelved. The project does, however, appear in Gas Infrastructure Europe's October 2024 LNG data set.