Elering says Pakrineeme Sadam's rent claim for LNG quay not justified

TALLINN – Estonia's state-owned system operator Elering has dismissed as unjustified a claim filed by the company Pakrineeme Sadam, which set up a liquefied natural gas (LNG) quay in Paldiski, for the system operator to pay more than half a million euros in monthly rent for the gas infrastructure installed on the quay.

In Elering's view, the claim is unfounded, as Elering and Pakrineeme Sadam have never entered into any lease agreement.

"During the intensive negotiations that took place in the spring, the private companies demanded that the state and Elering build a gas interconnection to the quay they were building so that they could use the quay for its intended purpose. Elering then did receive a guidance from the government and the minister of economic affairs, acting in the role of the general meeting, for the construction of the gas connection at the LNG terminal. The pipe connection established by Elering was completed by the end of November in the form as promised," Taavi Veskimagi, CEO of Elering, said in a press release on Wednesday.

"It is completely incomprehensible how private companies can demand rent for tolerating the Elering gas infrastructure located at the LNG quay and at the same time want to connect and take the infrastructure built by Elering into use for their own commercial purposes," the Elering CEO added.

At the same time, in spite of lengthy negotiations, it has not been possible for Elering to conclude a land use agreement with the private companies that requested the construction of the gas infrastructure, even though the landowner gave its consent for this during the planning and construction of the interconnector, the press release says.

Negotiations on the right to use the land under the interconnector have been ongoing since spring. As this process has not been successful, the land use issue was to be resolved together with the sale of the quay to the state-owned company Estonian Stockpiling Agency. Although the private companies have publicly promised to sell the quay to the state, the formalization of this transaction has reportedly stalled, Elering said.

"Since it has not been possible to sign any agreement with the private companies, Elering had no choice but to apply for compulsory possession of the pipelines installed on the land of Pakrineeme Sadam. At the end of December, Elering submitted, in the interests of itself and the Estonian state, an application to the local government for the establishment of compulsory possession in order to ensure the protection of the ownership of the interconnector established in predominant public interest," Veskimagi said.

Elering is currently processing the request for connection submitted by the private companies and is still waiting for confirmation from the party potentially to be connected that they have a floating terminal for the period of the desired temporary connection, through which gas could be delivered to the Estonian transmission network.

"When it comes to infrastructure built with public money, we must exclude the occurrence of phantom connections to the system, where the infrastructure is booked by one company without actually using it for the delivery of gas," the CEO of Elering said.

Elering says it has invested more than 20 million euros in the pipeline connection at the Paldiski terminal.

Pakrineeme Sadam is the company that owns the LNG mooring quay and associated facilities at Pakrineeme near the northwestern town of Paldiski, which belongs to Alexela and Infortar, the two private companies that developed the quay.