Vopak LNG terminal alters Balticconnector course

Photo: Vopak E.O.S.

Come Monday, world leading fuel storing company Vopak launches environmental impact assessment in Jõelähtme Commune primed to grant Muuga Harbour a LNG terminal in just a couple of years. 

An agreement between Prime Minister Taavi Rõivas and his Finnish counterpart Alexander Stubb lifted the Dutch firm Vopak LNG into favourite status to build a liquefied natural gas terminal in Estonia – instead of the Estonians-owned Alexela Energia.

Vopak, in cooperation agreement with Port of Tallinn for several years, first intends to build a small 20,000 – 30,000 cubic metre terminal of local importance in the eastern part of Muuga Harbour, next to coal terminal.

«Complete with the pipes, our terminal would cost less than €50m which is many times lower than the terminal planned to Paldiski by Alexela,» said the Vopak E.O.S. CEO Arnout Lugtmeijer.

As opposed to terminals in Paldiski or Inkoo, Finland, the Muuga project may start working even without building the Balticconnector pipe. Even so, Mr Lugtmeijer thinks it possible for the «lower» end of the Finland-Estonia gas pipeline now turned towards Muuga – and not towards Paldiski.

«In Paldiski, even to build the berth would cost as much, but in Muuga a fitting berth already exists and the pipe needed to connect into Tallinn gas systems is just 1.5 kilometres away. For a Paldiski terminal, a 50 kilometre pipe ought to be built on land,» he said.

Jõelähtme people pondering

First and foremost, the Muuga LNG terminal business plan foresees bunkering of vessels sailing the Baltic Sea (supplying the ships with motor fuel or oils – edit), as the environmental requirements to enter into force next year will cut the amount of sulphur allowed as exhaust from their chimneys. The vessels thus far using heavy fuel oil will have to burn the much more expensive diesel fuel or otherwise rebuilt to work with LNG. Also, Vopak intends to be holding Estonia’s security gas storage.

«The main goal is guaranteeing securing stock of gas. Considering where the planning process is at, a Muuga LNG terminal of such capacity may start working at the end of 2017,» assured Mr Lugtmeijer.

According to Jõelähtme commune government, the mere coordination of the terminal’s design in agencies and offices, as well as listening to the local inhabitants, may take up to three years.

«Though a favoured location has at the moment been picked for the LNG terminal at the side of the Muuga coal terminal, the thematic plan includes four alternative locations on Port of Tallinn territory,» said the commune’s planning advisor Marica Sepp. «At the moment, the opinion of local population regarding a terminal is not known, and will be found out via public discussion.»

At the estimation of economy ministry, the capacity needed for security stock indeed corresponds to the size of the terminal planned for Muuga Harbour by the Dutch. Though Prime Minister Mr Rõivas has been talking about Estonia needing a small LNG terminal to hold its gas security stock, the economy ministry does not take it for granted that, in the future, the state should invest into the very terminal by Vopak. To pick the optimal storage site, the state will go by security of supply and the costs of storage.

«It cannot be excluded that the security stock of gas will be held in the Latvian storage or Lithuania’s LNG terminal,» said economy ministry energy department head Timo Tatar. «As locations of the smaller, the so-called SOS-terminal, the ports of Tallinn, Paldiski and Sillamäe would indeed have the advantage of being parts of the transport corridors, as bunkering of ships with liquefied gas is surely a growing market on the Baltic Sea.»

Elering lost interest

As the market develops, Vopak plans to increase the terminal capacity. A year ago, while speaking to the portal Natural Gas Europe, Vopak LNG commercial director Joop Jonkers said Muuga terminal would hold 90,000 cubic metres satisfying, in his estimation, the needs of the Baltics as well as of Finland.

Vopak E.O.S – a key company in Estonian transit – and Vopak LNG dealing in global LNG business are subsidiaries of the Royal Vopak group headquartered in Rotterdam and world’s largest storing fuels.

The transmission network company Elering in talks to acquire Estonian gas networks, having a couple of years ago entered cooperation with Vopak to build a terminal, is currently no part of any LNG project and is not intending to launch any projects either. «We exited the Muuga project about a year ago, as the corresponding cooperation contract expired,» said Elering’s press representative.

Comment

Tarvi-Carlos Tuulik

Tallink technical director

In 2015, most of ships sailing the Baltic Sea will switch to fuel of under 0.1 percent sulphur content, which is diesel fuel. Currently, they are using heavy fuel of higher sulphur content – cheaper than diesel. An alternative would be treatment of exhaust gases so as to cut sulphur dioxide, but Tallink thinks it not expedient to have such devices installed. In the future this cannot be excluded, it depends on development of technology and fuel prices.

To use LNG as ship fuel, infrastructure companies must develop bunkering options – currently lacking. Only after that will the ship companies be able to make the vital investments to have the vessels’ main engines and fuel systems rebuilt.

In January, Tallink will switch to diesel fuel; even so, we will keep in the know with research and development when it comes to technical solution and will not exclude use of other alternatives as well. 

Updating the entire fleet constantly sailing the Baltic Sea will take at least 20 years; nevertheless, with rapid technological progress it may go faster. I’m talking about the existing vessels – when new ones are built, current and known requirements are considered.

Come Monday, world leading fuel storing company Vopak launches environmental impact assessment in Jõelähtme Commune primed to grant Muuga Harbour a LNG terminal in just a couple of years. 

An agreement between Prime Minister Taavi Rõivas and his Finnish counterpart Alexander Stubb lifted the Dutch firm Vopak LNG into favourite status to build a liquefied natural gas terminal in Estonia – instead of the Estonians-owned Alexela Energia.

Vopak, in cooperation agreement with Port of Tallinn for several years, first intends to build a small 20,000 – 30,000 cubic metre terminal of local importance in the eastern part of Muuga Harbour, next to coal terminal.

«Complete with the pipes, our terminal would cost less than €50m which is many times lower than the terminal planned to Paldiski by Alexela,» said the Vopak E.O.S. CEO Arnout Lugtmeijer.

As opposed to terminals in Paldiski or Inkoo, Finland, the Muuga project may start working even without building the Balticconnector pipe. Even so, Mr Lugtmeijer thinks it possible for the «lower» end of the Finland-Estonia gas pipeline now turned towards Muuga – and not towards Paldiski.

«In Paldiski, even to build the berth would cost as much, but in Muuga a fitting berth already exists and the pipe needed to connect into Tallinn gas systems is just 1.5 kilometres away. For a Paldiski terminal, a 50 kilometre pipe ought to be built on land,» he said.

Jõelähtme people pondering

First and foremost, the Muuga LNG terminal business plan foresees bunkering of vessels sailing the Baltic Sea (supplying the ships with motor fuel or oils – edit), as the environmental requirements to enter into force next year will cut the amount of sulphur allowed as exhaust from their chimneys. The vessels thus far using heavy fuel oil will have to burn the much more expensive diesel fuel or otherwise rebuilt to work with LNG. Also, Vopak intends to be holding Estonia’s security gas storage.

«The main goal is guaranteeing securing stock of gas. Considering where the planning process is at, a Muuga LNG terminal of such capacity may start working at the end of 2017,» assured Mr Lugtmeijer.

According to Jõelähtme commune government, the mere coordination of the terminal’s design in agencies and offices, as well as listening to the local inhabitants, may take up to three years.

«Though a favoured location has at the moment been picked for the LNG terminal at the side of the Muuga coal terminal, the thematic plan includes four alternative locations on Port of Tallinn territory,» said the commune’s planning advisor Marica Sepp. «At the moment, the opinion of local population regarding a terminal is not known, and will be found out via public discussion.»

At the estimation of economy ministry, the capacity needed for security stock indeed corresponds to the size of the terminal planned for Muuga Harbour by the Dutch. Though Prime Minister Mr Rõivas has been talking about Estonia needing a small LNG terminal to hold its gas security stock, the economy ministry does not take it for granted that, in the future, the state should invest into the very terminal by Vopak. To pick the optimal storage site, the state will go by security of supply and the costs of storage.

«It cannot be excluded that the security stock of gas will be held in the Latvian storage or Lithuania’s LNG terminal,» said economy ministry energy department head Timo Tatar. «As locations of the smaller, the so-called SOS-terminal, the ports of Tallinn, Paldiski and Sillamäe would indeed have the advantage of being parts of the transport corridors, as bunkering of ships with liquefied gas is surely a growing market on the Baltic Sea.»

Elering lost interest

As the market develops, Vopak plans to increase the terminal capacity. A year ago, while speaking to the portal Natural Gas Europe, Vopak LNG commercial director Joop Jonkers said Muuga terminal would hold 90,000 cubic metres satisfying, in his estimation, the needs of the Baltics as well as of Finland.

Vopak E.O.S – a key company in Estonian transit – and Vopak LNG dealing in global LNG business are subsidiaries of the Royal Vopak group headquartered in Rotterdam and world’s largest storing fuels.

The transmission network company Elering in talks to acquire Estonian gas networks, having a couple of years ago entered cooperation with Vopak to build a terminal, is currently no part of any LNG project and is not intending to launch any projects either. «We exited the Muuga project about a year ago, as the corresponding cooperation contract expired,» said Elering’s press representative.

Comment

Tarvi-Carlos Tuulik

Tallink technical director

In 2015, most of ships sailing the Baltic Sea will switch to fuel of under 0.1 percent sulphur content, which is diesel fuel. Currently, they are using heavy fuel of higher sulphur content – cheaper than diesel. An alternative would be treatment of exhaust gases so as to cut sulphur dioxide, but Tallink thinks it not expedient to have such devices installed. In the future this cannot be excluded, it depends on development of technology and fuel prices.

To use LNG as ship fuel, infrastructure companies must develop bunkering options – currently lacking. Only after that will the ship companies be able to make the vital investments to have the vessels’ main engines and fuel systems rebuilt.

In January, Tallink will switch to diesel fuel; even so, we will keep in the know with research and development when it comes to technical solution and will not exclude use of other alternatives as well. 

Updating the entire fleet constantly sailing the Baltic Sea will take at least 20 years; nevertheless, with rapid technological progress it may go faster. I’m talking about the existing vessels – when new ones are built, current and known requirements are considered.