Russian frost froze Sillamäe LNG terminal

Russian frost froze Sillamäe LNG terminal

The war of European Union and Russian sanctions put an end to the grand plans of building the Sillamäe gas terminal that would have cost hundreds of millions of euros and could have become an important transit centre for Gazprom gas, LETA/Postimees writes.

“The Sillamäe terminal could have become, besides the Ust-Luga port, a Gazprom gas transit project, but now they do not consider it possible to expand in our direction,” said one of the founders of the Estonian transit business Endel Siff, who last year became the head of Sillgas, that planned the Sillamäe terminal. The plan then was to build a 500 million euro terminal that would have processed Gazprom pipeline gas into LNG but also receive it from big ships for storing and selling. The terminal was supposed to handle 2.3 million tonnes of gas a year.

Siff estimated that construction of an LNG terminal for Estonian consumers has no perspectives since the government policy favours the use of local fuels, and the excise tax on natural gas that this year increased by 20% reduces the competitiveness of the so-called light-blue fuel further.

“A big international business would require international cooperation, but even according to optimistic estimates, restoring technological and financial cooperation with Russia would take at least two years if, for sanctions should be ended today, for example,” said Siff.

Sillamäe port, which had a construction rights contract for LNG terminal with Sillgas, considers it unlikely that any other company would take the LNG terminal development in the agenda in Ida-Viru County in the near future.

“Sillgas’s housing rights contract expired last year, and there is no other investor at the moment with whom we negotiate on this issue,” said representative of the port Andrei Birov. “Nevertheless, I consider the LNG topic to have good perspectives, and I believe that for bunkering ships – either with us or in Muuga – one of the terminal will be built.”

Alexela, which plans a big LNG terminal in Paldiski and Vopak LNG, which plans a small ship bunkering terminal in the Muuga port, confirmed their readiness to go ahead with their earlier intentions.

“After the Estonian government gave its support to the establishment of a regional LNG terminal not to an Estonian, but Finnish company, we have continued the development of the LNG terminal in Paldiski as a commercial project, just like we started it in 2009. Among other things, we are working on including strategic partners both in the technology sphere as well as for the entire LNG value chain,” said Alexela Energia Manager Marti Hääl.

Vopak LNG other hand, maintains that the LNG terminal in Muuga is the best solution to cover Estonia’s needs and integrating the local gas infrastructure with that of the region. “The LNG terminal planned in Muuga port covers the need for bunkering, as well as supplying and storing the natural gas reserves connected to Estonia’s energy security,” explained the company’s spokeswoman Olga van Kampen. “The main objective is guaranteeing gas security reserve, the so-called SOS reserve. Given the current status of the planning process, Muuga LNG terminal with such capacity can start at the end of 2017.”

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