Estonian govt buys Paldiski LNG quay with port territory for EUR 31 mln

The liquefied natural gas (LNG) mooring quay in Paldiski. Photo: Raul Mee

The Estonian Stockpiling Agency, an agency belonging to the state, and the private company Pakrineeme Sadama OU signed an agreement on Friday by which the state acquired the liquefied natural gas (LNG) mooring quay in Paldiski with associated infrastructure and port property.

The total value of the transaction excluding VAT is 31.5 million euros, of which the cost of the quay is 30 million euros and of the property 1.5 million euros.

With the transaction, the Estonian Stockpiling Agency fulfilled the government's promise to business operators to buy the LNG quay in a situation where their business prospects for operating the LNG reception infrastructure change significantly, the Stockpiling Agency said in a press release.

Ando Leppiman, the CEO of the agency, said the quay was acquired with the aim of creating an independent gas security of supply solution for Estonia together with state-owned system operator Elering, the owner of the gas infrastructure.

"The main objective of the Stockpiling Agency is to ensure the supply of vital commodities for the population of Estonia, and the main purpose of use of the acquired infrastructure is based on energy security considerations," Leppiman said in a press release.

Prior to the acquisition, the agency commissioned a legal, financial and technical audit to make sure that the acquired quay meets applicable requirements. According to the agency, Pakrineeme Sadam has done a good job in building the quay and the associated infrastructure at considerable speed. According to the expert opinions received, the quay built in the sea allows for the reception of LNG floating terminals.

"After today's purchase transaction, the next task of the Stockpiling Agency is to continue preparations for the completion of the development of the port as a whole by the autumn of this year at the latest; the provision of gas infrastructure and connection to it are the competence of the gas system operator Elering. The aim of the Stockpiling Agency is to create the capacity to provide port services compliant with international standards for the vessels mooring in Pakrineeme harbor," the CEO noted.

"In summary, Estonia will have the independent capacity to receive LNG by sea, the energy security of both the country and the wider region will increase, and companies in the region will have a third alternative for importing natural gas besides the ports of Klaipeda and Inkoo with LNG reception capacity," he added.

Marti Haal, board member of Pakrineeme Sadam, described the deal as unprofitable for the developers of the quay.

"The state got the port from us at a much lower price than the cost of building it, and hopefully this solution and our contribution will help speed up the completion of the reception capacity. Now the launch of Paldiski LNG is 100 percent a responsibility of state-owned enterprises. Life is full of lessons, and this, too, has given us something to take with us. We are convinced that in the interests of Estonia's economy, energy security and wellbeing, LNG reception capability should nevertheless be created in time for the next heating season," Haal added.