Location of Baltic Sea LNG terminal has to be decided by end of June

Eesti LNG projektid.

PHOTO: graafika: Alari Paluots

Estonia and Finland have to agree by the end of June on which shore of the Gulf of Finland to build the regional liquefied natural gas (LNG) terminal.

"If we fail to reach agreement by the end of June the current financing round will run out. The next chance will come in 2016 and then there may not be any funds for this project," Prime Minister Andrus Ansip said at the government's press conference Thursday.

In Ansip's words, the government is under strong time pressure and negotiations should be intensified. "If we don't step up the pace the risk exists that there will be no [Balticconnector] pipeline and no terminal," he said.

"The [European Commission] analysis produced an outcome favorable for Estonia. In our opinion Estonia is the right place for the LNG terminal. Unfortunately the Finns believe that Inkoo is the best location," Ansip said.

The prime minister added however that the primary consideration for Estonia is not the location of the facility but that it should guarantee the lowest possible price of gas.

Currently three potential locations for the LNG terminal are under consideration - Paldiski and Muuga in Estonia and Inkoo in Finland. The best possibility to reach an agreement is with the help of an "objective decider", the prime minister said.

Asked by BNS who should help Estonia and Finland decide the location of the terminal, Ansip said it would be most natural to Estonia if it was the European Commission.

Regrettably the Commission is not very interested in this and would rather that Estonia and Finland hammered out an agreement among themselves, he added. "So, to begin with, Estonia and Finland should agree on who ought to be the arbiter in this matter."

The government discussed matters related to the construction of a regional LNG terminal at its Thursday sitting, favoring a regional solution package. The package includes a 562 kilometer gas interconnection between Poland and Lithuania (GIPL), modernization of the Latvian storage facility and improvement of the connections in the Baltic states, a regional LNG terminal on the shore of the Gulf of Finland, and the Balticconnector undersea gas pipeline between Estonia and Finland.