Lithuania’s First Lng Import Terminal Arrives

Courtesy of Argus Media
October 27, 2014

Lithuania has taken delivery of its first LNG import facility, which may enable the country to cease importing gas from Russia by as early as next year, Lithuanian president Dalia Grybauskaite said.

Grybauskaite called the import facility a “strategic energy and geopolitical project” that will enable Lithuania to “drop” Russian state-controlled Gazprom as a supplier if it so chooses.

The 2.2mn t/yr floating storage and regasification unit (FSRU) Independence, which has 170,000m of LNG storage capacity, arrived at the port of Klaipeda today. The terminal, which has sendout capacity of 3bn m/yr, can meet 100pc of Lithuania’s gas demand, and 90pc of the gas demand of Lithuania and the two other Baltic states Latvia and Estonia, Grybauskaite said.

Lithuanian energy minister Rokas Masiulus said a 23pc discount negotiated with Gazprom in May has already lowered gas import prices sufficiently to recoup the cost of construction of the terminal infrastructure four times over. The cost of construction which covers the jetty, arm and associated terminal connecting infrastructure is estimated at around 101mn, suggesting that Lithuania has already benefited from the reduced gas bill to the tune of over 400mn.

Grybauskaite has previously hinted that supply contracts with Gazprom, which expire in late 2015, may not be renewed. The terminal has given Lithuania leverage in negotiations with Gazprom over the price that it pays for pipeline gas imports.

Pipeline gas imports from Russia are now comparable to the price paid for LNG from Norway, Masiulus said today. The range is approximately 900-1,000 litas/’000m ($9.16-10.17/mn Btu).

The first LNG delivery to Klaipeda is scheduled for tomorrow. The 160,000m Golar Seal is bringing a Norwegian cargo to Lithuania after winning a tender to supply the commissioning cargo. The vessel delivered a small partial cargo to the Netherlands first and will deliver around 100,000m of LNG to Klaipeda.

As well as the commissioning cargo, Litgas, a subsidiary of state-run utility Lietuvos, and Norway’s Statoil signed an LNG import agreement in August for 540mn m/yr of gas — around 391,500 t/yr, or six to seven cargoes of LNG for five years on an NBP-linked basis.