Fr, 30.09.2022

How they wanted to hand over Estonia’s LNG terminal to the Russians

How they wanted to hand over Estonia’s LNG terminal to the Russians
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Peeter Ernits instigated the Port of Paldiski to call for an LNG terminal in the Northern Port closely connected with Russia. Vootele Päi, the current advisor to the Minister of the Interior, helped prepare the address to government institutions.
Peeter Ernits instigated the Port of Paldiski to call for an LNG terminal in the Northern Port closely connected with Russia. Vootele Päi, the current advisor to the Minister of the Interior, helped prepare the address to government institutions. Photo: Kollaaž: Sander Ilvest, Erakogu
  • The LNG terminal will come to Pakrineem in cooperation with Alexela, Infortar and Elering.

In May, desperation struck Estonia: negotiations for the planned construction of the Pakrineeme port berthing pier for a floating LNG terminal, which promised a possible solution to the gas drought, were on the verge of failure. The Paldiski Northern Port with its scandalous reputation stepped up and its efforts were supported by a motley group.

Alexela’s and Elering’s tense negotiations for the construction of the berthing pier at the top of the Pakri peninsula seemed to have reached a dead end by May 6. However, a few days later, on May 11, it was announced that an agreement had been reached.

EKRE had unexpectedly intervened already a few weeks earlier and started lobbying for the Paldiski Northern Port with its shady background. The chairman of the party, Martin Helme, defended the idea of ​​bringing the tanker to the Northern Port in the ETV program «First Studio», while EKRE MP Peeter Ernits did the same in the Riigikogu.

On May 13, the Chairman of the supervisory board of Paldiski Sadamad AS (Paldiski Ports Ltd), Aleksei Mürisep, sent a letter to the state authorities in which he listed the arguments why the tanker should be brought to the Northern Port, where suitable quay and conditions already exist.

Rollercoaster background

As the Russian-Ukrainian war escalated, the Northern Port gained free access to media as it mediated transport of imported luxury cars from Estonia to Russia despite the sanctions.

However, the entire history of the port, which several Paldiski city officials explained Postimees, is quite colorful.

When the city of Paldiski was finally transferred to Estonia after the departure of the Russian forces in 1994 and came under the control of the Ministry of Defense, the basin of the Northern Port were full of sunken Russian torpedo boats. The Soviet army needed it for the protection of the Southern Port. In case of an attack against Paldiski from the Gulf of Finland, the torpedo boats of the Northern Port were supposed to detain the enemy so as to ensure safe departure of submarines from the Southern Harbor. For this purpose, a «back door» was prepared in the strait between the Pakri islands and the Kurkse coast in the form of a deep trench. In 1996, it claimed the lives of Estonian servicemen who drowned there during a training exercise.

The Ministry of Defense held the port for a few years, finally handing it over to the city of Paldiski. Paldiski Sadamate AS was established in the city, one of the goals of which was said to be to bring the Northern and Southern ports together. However, the Southern Port was transferred to the Port of Tallinn immediately after the city came under Estonian rule. One of the city heads at that time (both he and all other city officials wished to remain anonymous) told Postimees that the city of Paldiski had to privatize the Northern Port due to its large financial obligations. It was done through a public auction, and the council's decision earned the city eight million kroons.

Igor Savenkov, a well-known vodka producer at the time, became the main owner. However, he did not have enough resources for the port business, and around 2003 he sold a large share of the port's stake to Aleksei Chulets and Aleksandr Konechnyi. After a couple of years, Savenkov was completely ousted from the circle of owners.

Those who have met Aleksei Chulets say that his business partners tend to disappear from his company sooner or later. One of the most persistent people in his inner circle is Jaanus Ilumets, a member of Isamaa party, who has been the security chief of the port since the beginning, when the port was owned by Chulets.

According to one source, Chulets also bought the property in Viimsi, which had been allocated for the memorial church of the ferry Estonia disaster victims and built his house there instead. The Panama leak (a huge data leak at a Panamanian legal aid firm that revealed a huge network of shell companies in tax havens) revealed that the port's owners have been hiding behind shell companies registered in the Netherlands Antilles. At the end of 2019, Postimees wrote that the company NT Marine owned by Chulets transports Russian coal and oil to Ukraine together with a Belarusian oligarch.

Even now, Paldiski Sadamate AS stands out for its tendency to optimize taxes. For years, the company has shown losses of several million euros, and critics are wondering. The business does not seem to make any economic sense, because the owners are constantly pumping money into it to keep it running. But the results are not noticeable. At the same time, new shares have been issued every year at a premium, and the increased share capital gives an idea of ​​a pile of money on which no income tax has to be paid. In other words, if the loss in recent years has been more than 10 million euros, the equity has not decreased.

Chulets began to transport cars to Russia during the 2008-2009 economic crisis when parking lots for the vehicles were built on a large territory around the port. The builders were claimed to have been very annoyed later because Chulets failed to pay the bills or paid much less than promised. According to one city official of that time, the documentation needed to build the extensions of the Northern Port was not in order, which is why the city government consistently fined the port, which as consistently failed to pay them.

In the 2009 local election, the Northern Port's electoral list gained power in the city and the problems with building permits and fines disappeared. A sufficient number of the city council members either worked in enterprises owned by Chulets or were otherwise dependent on him.

Competitors claimed that Chulets invested up to 15 million kroons in the victory of a hitherto unknown list, which is a curiosity for such a small municipality. According to their companions, they needed to get power at all costs. The people paid or influenced by Chulets stayed in power for two election periods. Currently, the Northern Port staff is no longer among the council members. Postimees tried to receive comments from Chulets, but without success.

Well-known PR personality to the help

Back to the present day. Vootele Päi, PR specialist of the then Corpore firm, helped to draft Mürisep’s appeal calling for bringing the LNG terminal to the Northern Port. While the flirting of EKRE, which defines itself as a nationalist party, with the North Port with Russian ties caused amazement in the spring, of the EKRE, the cooperation between the scandalous port and the advisor of the newly-appointed Minister of the Interior Lauri Läänemetsa (SDE) raised quite a few eyebrows.

«The contact came from another sector through one of the previous contacts. They wanted to get advice about which politician should receive this appeal, and in order to make it really public, it was also sent to the media,» Päi explained.

According to Päi, the cooperation was one-off and, in addition to this statement, it was limited to responding to one of the media requests (about Chinese cars moving through the Paldiski port). Thus, although he was aware of the company's scandalous background, he does not see a conflict here. As Corpore is a communications bureau, it was not requested to arrange meetings with officials, ministers or politicians.

«We were not asked for a lobby service – not that Corpore would offer it, Corpore's main focus is media relations. The Northern Port of Paldiski asked for a public address, the editing of a text and releasing it to the media. This is what we did,» Päi noted.

Ernits instigated the Northern Port to interfere

According to him, it would be futile to seek connections with the unexpected activity of EKRE. «It is clear to anyone who has read my social media postings or published opinion articles how extremely unlikely it is that I would meet with Helme for some kind of lobby work, and secondly, it would be even more unlikely that mi client would somehow benefit from that meeting,» Päi said.

Peeter Ernits, a lifelong resident of Kloogarand, who knows the Pakri Peninsula like his five fingers, was the one to plant the idea of bringing the LNG tanker to the Northern Port in Mürisep’s mind and eventually secured the support of the rest of the party. Ernits assures that he had not personally met with Mürisep before.

Mürisep, the chairman of the port's supervisory board, had contacted the government institutions on that issue earlier, long before the Russian-Ukrainian war broke out, but according to Ernits, Mürisep had experienced «fooling and failure to answer the letters» by the Ministry of Economic Affairs. At Ernits’ instigation he did it once more. But, as Mürisep admitted to Postimees, he again never received a formal answer.

Close ties with Russia

Currently, the shares of the port company have been divided equally between Chulets' long -term business partner, Maltese citizen of Russian background Sergey Pasters, and another Russian citizen, Yelena Skvortsova, with a blurred background. Chulets is now just a member of the supervisory board of the company. In addition, last year he transferred his 1800-square-meter villa in Viimsi as well as 50-percent stake of his another large firm, Baltic Sea Bunkers, in the name of Skvortsova. Another 50 percent also belong to Pasters. In the spring, Päevaleht revealed that Chulets and Pasters have a network of companies in Estonia and Latvia, which receive significant revenue from the sanctioned Belarusian oil business.

Didn't the background of the port management worry Ernits? «Of course I read all sorts of things. But in this case, I did not deal with the background study of Chulets or anyone else. My interest was that Estonia would find an advantageous place as soon as possible where the LNG tanker could berth.»

Ernits received a sort of guarantee of absence of Northern Port’s harmful intent from the fact that Mürisep’s appeal promised to subordinate the port to the Ministry of Defense. Because, as Mürisep himself explained his motives to Postimees, «every ship that carries so much energy must be protected».

«If someone is ready to yield in writing and voluntarily [the port to the control of the Ministry of Defense], every normal person will reckon with a high-level security check. It showed me that the management of the Northern Port has nothing to hide,» Ernits commented Mürisep's proposal.

The agenda of Ernits and EKRE was pragmatic. In short: since there is a quay in the Northern Port, bringing the tanker there would allow facing the winter more cheaply and more certainty. However, now Alexela eagerly took advantage of the time window, according to Ernits.

«It seems strange that all the eggs are put in one basket and that no other options are discussed which could be cheaper,» Ernits said.

The construction of a quay in Pakrineem and a kilometer-long gas pipe to the vessel has raised many questions for Ernits and therefore for the whole of EKRE. The men working at sea have told Ernits that when the quay is ready and the tankers come in, the waves are very high and accidents could easily happen.

«According to the original version, which Alexela presented seven to eight years ago, there was a stationary long quay, and before its construction, a temporary stone dam had to be built offshore. Now it all was forgotten, and a simpler and faster option was adopted,» he said.

Too close to the city

Taavi Veskimägi, the manager of Elering, has previously confirmed that before the Pakrineem location was selected, other options involving the Paldiski southern and northern ports had been reviewed. Pakrineeme, however, was the option allowing the fastest development.

Elo Ellermaa, communications project manager of Elering, admitted that there is no connection between the Northern Port and the existing gas pipeline and that building it would be a complicated and unexplored option. Nor are there any plans involving LNG.

In addition, the West Harju municipal administration also opposed the construction of a floating terminal in the Northern Port of Paldiski as it would directly affect the citizens. The nearest school is just 500 meters away. Moreover, the environmental impact of the quay construction and berthing the tanker has been fully assessed regarding Pakrineem, but it has not been carried out in the Northern Port, not to mention the environmental impacts of the construction of a new land pipeline.

Local government does not cooperate with the port

According to Jaanus Saat, the mayor of West Harju rural municipality, its administration has virtually no cooperation with the Northern Port, while cooperation with the Port of Tallinn, the owner of the Southern Port, is excellent.

«They have not directly caused any trouble but we have tried to negotiate with them so that they would at least partially release the seaside area to the local residents. But there is no feedback at all or something not worth mentioning. We have problems with them because we should make a decision on how to open the beach area. This would require cooperation with the Northern Port,» Saat said.

According to him, the port has no cooperation with the city and the community and is not interested in the living environment. «They say that they are a big employer and if we start to restrict the operations of the port, it would cause much greater harm to the municipality because people would lose work. However, we know that jobs and salaries there are not at the level considered normal today. The Northern Port staff is earning less than the others.»

Chronology

  • At the end of March, the government announced that in order escape from dependence on Russian gas, the ability to receive liquefied natural gas should be established in Paldiski by autumn.
  • In mid April, Alexela announced that it will build the terminal in cooperation with Eesti Gaas and Tallink’s owner Infortar. Elering would ensure pipeline connection to the Paldiski compressor station which transfers gas to Finland and Latvia.
  • On May 6, it was announced that Alexela’s and Elering's talks to build the berthing quay had failed.
  • On May 11, however, the agreement was reached. Alexela will build the quay and obtain a floating terminal. Alexela expected access from the state to the gas transmission network and the regional gas market by autumn.
  • At the end of July, the state issued to the LNG terminal builders a guarantee of EUR 38 million for the timely completion of the terminal.
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