Vopak to Produce Feasibility Study on Estonia LNG Terminal

Vopak LNG Holding BV, a unit of Royal Vopak NV (VPK), will conduct a feasibility study for an Estonian liquefied natural gas terminal at Muuga harbor, near Tallinn.

The study, due to be presented to the Economy Ministry in August, will cover technical and economic details, the cost of construction and the need for European Union funding, according to the letter of intent signed with Estonia’s power grid company Elering AS and port operator Tallinna Sadam AS.

The study will be useful “to convince the European Commission of the suitability” of a Tallinn LNG terminal for supplying “the whole of the Baltics and Finland,” Elering said in an e-mailed statement today.

The company said the commission has previously expressed support for the development of the LNG solution in the Baltics on condition that it is “able to cover at least 25 percent of the consumption of the entire region.”

Building an LNG terminal is part of the strategy of Estonia’s ruling coalition to reduce dependence on Russia’s OAO Gazprom, which owns 37 percent of local gas utility Eesti Gaas and is the sole supplier of gas to Estonia, Latvia and Lithuania. The three countries have uneasy political relations with their larger neighbor and point to supply risks and higher natural-gas prices than in western Europe.

The three Baltic countries asked the commission last November to help decide whether a regional LNG terminal is needed and where to build it, after failing to agree on a location. A study by a unit of Poeyry Oyj, a Finnish engineering company, commissioned by the Estonian government, concluded that Estonia would be the best location, Prime Minister Andrus Ansip said then.

To contact the reporter on this story: Ott Ummelas in Tallinn at oummelas@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net