Paldiski LNG Terminal

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Paldiski LNG Terminal, also known as Baltic Gaas, is a shelved (inferred 2 y) LNG import terminal in Estonia.

Location

Table 1: Location details

Name	Location	Coordinates (WGS 84)
Paldiski LNG Terminal	Paldiski, Harju, Estonia	59.38445, 24.07494 (exact)

The map below shows the exact location of the terminal:

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Project Details

Table 2: Infrastructure details

mtpa = million tonnes per year

Name	Facility type	Status	Capacity	Total terminal capacity	Offshore	Associated infrastructure
Paldiski LNG Terminal	import	shelved (inferred 2 y)	1.84 mtpa	1.84 mtpa	False	Paldiski FSRU

Table 3: Cost

Name	Facility type	Cost	Total known terminal costs
Paldiski LNG Terminal	import	US$436,000,000 (400,000,000 EUR)	US$436,000,000

Financing

No financing data available.

Table 4: Project timeline

FID = Final Investment Decision, used by some developers to indicate a project will move forward

Name	Facility type	Status	Proposal year	FID year	Construction year	Operating year	Inactive year
Paldiski LNG Terminal	import	shelved (inferred 2 y)	2015	–	2016	2025	2024 (shelved)

Ownership

Table 5: Ownership

Name	Facility type	Status	Owners	Parent companies	Operator
Paldiski LNG Terminal	import	shelved (inferred 2 y)	Alexela AS; Infortar AS	AVH Grupp AS; Infortar AS	–

Background

Paldiski LNG Terminal is a proposed liquefied natural gas (LNG) regasification terminal in Estonia. The project would be built by Balti Gaas, a subsidiary of Estonian company Alexela Group.

In February 2017, the EU denied Alexela's application for a grant of about $400 million for the project from the European Cohesion Fund. Alexela announced that it planned to continue pushing forward with the project anyway, using private capital.

In October 2018 Alexela and Tallinna Sadam signed a memorandum of understanding (MOU) to jointly develop a proposal for an LNG terminal.

There appears to be a certain amount of competition between this proposal, the Lithuania's Klaipeda LNG Terminal, and the Tallinn LNG Terminal for EU endorsement and funding. According to Food and Water Europe's profile on Estonian gas, "These two projects [the Tallinn Terminal and the Paldiski Terminal], have not been accepted in the third Projects of Common Interest list but both applied as candidates for the 4th list. The Commission seems to only support one project in the region leaving it up to the Baltic states to decide on which will be their priority project. It is clear that a new LNG terminal such as this would need financial support from the EU. This support would potentially have to be really significant, as conceived by the Paldiski LNG terminal project operator who warned that the infrastructure could only be built if the European Commission was covering 43% (around €150 million) of the €344 million needed. However, an application by the Paldiski LNG project promoter for EU funds under the [Connecting Europe Facility] was denied in 2017. Other developments make plans to add new LNG capacities seem even less reasonable: the Lithuanian LNG terminal which is already able to supply Estonia and Latvia with gas, was planned to be leased until 2024. The Lithuanian government approved the terminals acquisition after 2024 in 2018, which makes it clear that these import capacities would be available beyond 2024 if necessary."

In May 2019, Estonian media reported a senior Alexela official commenting that the terminal could start operating in 2025, and that projected construction costs were estimated at €300 million.

The project features as a 'Priority Project' on the website of the Three Seas Initiative, a forum of 12 EU member states which has an associated Investment Fund set up to catalyse investments in the energy, transport and digital sectors of the participating countries. The project entry for the Paldiski LNG Terminal states that construction is planned for the 2021-2024 period, with completion by 2025. The project budget is stated as €400 million, with financing sources "To be determined". As of May 2021, the project description states: "All requisite planning and FEED [front End Engineering Design] is completed, all building and environmental permits have been obtained. On-site preparatory works of infrastructure have started."

The project was not included in the November 2021 publication by the European Commission of the 5th PCI list.

2022 Pivot to a Phase 1 FSRU

Beginning in 2022, the Estonian government advanced plans to develop a floating storage and regasification unit-based terminal (FSRU) at the site of Paldiski LNG Terminal, which later was framed as Phase 1 of the project, preceding the development of land-based Phase 2 LNG import infrastructure.

In March 2022, amidst the Russia-Ukraine war, Upstream reported that the Estonian government was "analysing the options on how to replace Russian gas," and that chartering and installing a floating storage and regasification unit (FSRU) offshore of Paldiski was being explored. According to reports in Estonia, the government was aiming to have the temporary FSRU in place by the third quarter of 2022. However, the timeline for taking a decision on the project remained unclear and, according to a spokesperson from the Ministry of Economic Affairs and Infrastructure, no details of the plan would be disclosed before all necessary decisions were made. Estonia's Minister of Economic Affairs and Infrastructure, Taavi Aas, was reported to have submitted a proposal for a temporary FSRU facility to the Estonian government. Aas floated the possibility of the Estonian state financially supporting the FSRU's development, noting also: "It may be the case that the terminal is entirely economically justified, but it may also be the case that the economic justification isn't all that great ... It is, however, significant specifically from a security perspective, which is where the state naturally has its role to play."

At the beginning of April 2022, it was reported that the Estonian government had mandated Taavi Aas to start preparations for constructing a mooring jetty in Paldiski to receive LNG offshore and to connect it to the Balticconnector Gas Pipeline, with a view to the FSRU terminal being set up "as early as November" to primarily serve the greater gas supply needs of neighbours Finland and Latvia. Prime Minister Kaja Kallas talked of an "investment volume" of €500 million for the project, with funding to come from the state budget, though a precise project cost had yet to be determined by the economy ministry. A larger LNG terminal to serve the Baltic, potentially the proposed onshore Paldiski LNG Terminal, still had to be discussed with and negotiated among the Baltic countries.

On April 7, 2022, as part of efforts to end dependency on Russian gas, Estonia and Finland announced they were partnering to jointly charter a FSRU for LNG importing which would be shared between two jetties to be built at Paldiski in Estonia and Inkoo in Finland. Estonia's state-owned energy grid company Elering and Finland's state-owned gas transmission system operator Gasgrid were reported to be working on the joint FSRU charter plan. On April 18, the Estonian energy company Alexela announced it was developing the Paldiski FSRU Terminal in partnership with Estonian investment firm Infortar. The planned capacity of the terminal was not disclosed and the Estonian companies confirmed the aim of commissioning the offshore terminal by November 2022. Alexela also confirmed that the FSRU project would be the first phase in the wider effort to build a "permanent solution for the terminal" in the second phase, referring to the onshore Paldiski LNG Terminal which the company has been proposing for several years. Heiti Hääl, chairman of Alexela’s supervisory board, commented, "In our opinion, the Paldiski LNG terminal must be a public terminal and other market participants and investors are also expected to join it". The Latvian government opted to join the Paldiski project as discussions about a possible Latvian LNG terminal remained unresolved. Latvia's Economics ministry estimated that, based on consumption, it was looking at a 30% stake in the project requiring an investment of €30-40 million.

In early May 2022, the Estonian and Finnish gas system operators Elering and Gasgrid signed a cooperation agreement for the joint lease and management of the FSRU. The rental costs for the FSRU were agreed to be split in line with Estonian and Finnish gas consumption levels, meaning Elering will cover 20% of the costs and Gasgrid 80%. The companies foresaw the FSRU arriving in Estonia by the end of the year, with the vessel to subsequently relocate to Finland when the jetty at Ingoo is ready and to supply both countries from that location. Disputes between Elering on one side and Alexela and Infortar on the other also emerged over both how to finance the construction of the new jetty at Paldiski and its ownership. Elering claimed on May 6, as negotiations between the two sides broke down, that it was being asked to pay the entire €40 million in construction costs for the jetty as a rental fee, while Alexela would retain ownership of the jetty.

On May 12, 2022, Estonia's Ministry of Economic Affairs and Communications, Elering and Alexela reached agreement on the project's development, with Alexela and Infortar to construct the quay and rent the FSRU. Minister of Economic Affairs and Infrastructure Taavi Aas said the two private companies would be going it alone: "They are doing it under market conditions, without any additional state contribution, and not even state guarantees. The only task of the state is to ensure the connection of the quay to the mainland and to ensure that the gas reaches the Estonian gas network." Construction work at the Paldiski jetty was reported to be under way.

In June 2022, Elering began construction work on the 1.2 km pipeline connecting the proposed FSRU to the grid.

In late July 2022, Estonian media reported however that a form of state guarantee for the Paldiski FSRU's construction had been granted by the government. In order to provide investment security for Alexela and Infortar, the private developers constructing the quay at Paldiski, the Estonian government announced a €38 million boost to the share capital of the Estonian Stockpiling Agency. According to a spokesperson for the state-owned agency: "The private company is currently constructing the quay using own assets. We know that Finland is constructing its mooring infrastructure. In short, there is not enough business in the region to cater to two locations where LNG can be received as gas consumption is modest and there is considerable risk that one of the locations, the quay in Paldiski in this case, might not be economically feasible".

In August 2022, it was reported that Finland's Gasgrid was leasing the Examplar FSRU from the U.S.-based company Excelerate Energy on a ten-year contract. The vessel was to sail to the Baltic Sea to provide LNG regasification services to both Finland and Estonia.

As of October 2022, work on the mooring point and the connection with the Balticconnector pipeline were complete.

In March 2023, the Estonian Stockpiling Agency and Pakrineeme Port agreed for the state to purchase the LNG loading quay in Paldiski along with related infrastructure and port property for a total value of €31,500,000 excluding value-added tax (VAT).

In May 2023, Estonia's Auditor General Janar Holm wrote in a memo to the climate minister that clearer information was needed regarding the terminal's timeline, and that the project required a central coordinator and financing model. "The National Audit Office deems it necessary to address the matter because approximately €60 million of taxpayer funds have been invested in the construction of the port and gas infrastructure in Paldiski, but the LNG receiving capacity has not yet been achieved," Holm explained. The same month, it was reported that Estonia and Latvia are planning an agreement to jointly purchase LNG in the event of a shortage.

As of June 2024, the annual GIIGNL report said that the terminal was on the verge of completion, but that no FSRUs had been secured. The terminal's sponsor said that it did not make sense to rent an FSRU as of the end of 2023 given the limited supply of such vessels available and that the country had enough access to gas. The terminal facility is expected to be completed at the end of 2026, but, as of June 2026, there are no updates on an FSRU.

As of July 2024, there have been no updates for the onshore Phase 2 of Paldiski LNG Terminal in over two years, and the project is inferred to be shelved. The project does, however, appear in Gas Infrastructure Europe's October 2024 LNG data set.

As of July 2026, there have still been no updates for Phase 2 of Paldiski LNG Terminal in over four years, and the project is inferred to be cancelled.

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Additional data

To access additional data, including an interactive map of LNG terminals, a downloadable dataset, and summary data, please visit the Global Gas Infrastructure Tracker on the Global Energy Monitor website.