Estonia’s Alexela Group not granted EU funding for LNG terminal

The Estonian Alexela Group failed to secure EU funding for its project to build a liquefied natural gas (LNG) terminal in Paldiski in last year’s round of calls for energy proposals, but plans to go ahead with the project and raise private capital if necessary.
The company was notified by the European Union that the Paldiski LNG terminal was not going to get financial support at this point, Alexela said on Monday, February 20. The company was seeking a grant of close to 344 million euros, or 39 per cent of the cost of the project from the European Cohesion Fund.

According to the company, the EU decision referenced the Lithuanian Klaipeda LNG terminal, and stated that no support for a Finnish-Baltic regional LNG terminal was forthcoming from last year’s round of calls.
Alexela Group’s Board Member Marti Haal said the announcement could be anticipated in the light of the Lithuanian prime minister’s recent utterances.

“We have been developing the Paldiski project in accordance with the game rules of the Baltic Energy Market Interconnection Plan (BEMIP) agreed upon among governments of the Baltic Sea region, in whose framework the location of a regional terminal has also been selected, and agreements between the Estonian and Finnish governments concerning Balticconnector and the Paldiski LNG terminal have been reached,” he said in a press release.
According to Haal, Lithuania’s decision to temporarily lease an LNG terminal outside the BEMIP agreements has influenced the EU’s decisions as well.

“Clearly, in a situation where all regional market players do not play by the agreed-upon rules, and the state can start distorting the market with taxpayers’ money at any moment, private capital becomes cautious,” he said.
Alexela filed an application for 344 million euros with the EU in October 2015. The company had by that time already invested close to 10 million euros in the project.