Baltic LNG Terminal May Cost EU375 Million, Estonia’s Parts Says
A liquefied natural gas terminal covering the needs of the three Baltic countries and possibly Finland would cost about 375 million euros ($510 million), Estonian Economy Minister Juhan Parts said, citing a report by a unit of Poeyry Oyj, a Finnish engineering company.
A regional LNG terminal would have an annual output capacity of 2.5 billion cubic meters, Parts said today in parliament in Tallinn in response to lawmakers questions, adding the estimates are preliminary. Alternatively, the cost of building a terminal to cover only Estonia’s needs would be 125 million euros, Parts said.
The calculations show that both a local and a regional terminal could be economically viable, Parts said. Still, a regional project is unlikely to get European Union support during the present budget period ending in 2013, he added.
OAO Gazprom, Russia’s gas export monopoly, is the sole supplier of natural gas to Estonia, Latvia and Lithuania. The Baltic countries, which have uneasy political relations with their larger neighbor, are seeking EU support for building an LNG terminal in the region, citing higher gas prices than in western Europe and supply risks. They have yet to agree on a single location.
Finland, which seeks to reduce dependence on natural gas, is at this point not interested in building a pipeline to Estonia, which would double the regional market size, Parts said.
Parts reiterated that Latvia’s plan to build an LNG terminal in Riga that would use the Incukalns underground storage facility is not going to increase Estonia’s security of supply and would therefore not qualify for EU support as a regional terminal.
Estonian consumers would gain as much as 30 million euros annually if they had access to gas at western European price levels, Parts said. Some private investors may be “factoring in hypothetical state guarantees about rising gas consumption,” when calculating returns from a potential LNG terminal, he said, adding Estonia will never give such guarantees.
The analysis by Poeyry Management Consulting UK Ltd., which will also analyze options to separate AS Eesti Gaas’s natural gas sales and transmission divisions, is due to be published next month, Parts said. The Baltic prime ministers are due to discuss the regional gas market integration in November, he added.
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