Baltic LNG terminal counters ‘unfair’ prices for piped Russian gas - 17/09/2014

Lithuania aims to cut its reliance on Russian piped gas and to import more energy supply on ship.

LITHUANIA’s liquefied natural gas import terminal, soon to start operating, was developed due to a sense of unfairness over steep pipeline gas prices charged by Russia, the project’s leader said today.

The floating import terminal, aptly named Independence , will enable Lithuania to slash its reliance on Russian piped gas, Klaipedos Nafta chief executive Rokas Masiulis told the Informa LNG conference.

Before the 2010 decision to develop the terminal, Lithuania was paying the highest price for Russian piped gas in Europe, despite its geographical proximity to Russia’s gas supply.

The small Baltic state was paying as much as 30% more than Germany for Russian gas.

“Unfairness was a sense we had for many years,” said Mr Masiulis. “The sense of unfairness was the driver [over] why we decided to do this terminal.”

As soon as Lithuania decided to develop the terminal, Russia’s Gazprom offered the country a discount on its piped gas.

However, the Baltic state was determined to push forward without being tied to Russia.

Recent tensions over Russian gas flows following Moscow’s conflict with Ukraine have only made the case for cutting Lithuanian reliance more urgent.

The country is 100% reliant on Russia for its energy.

This complete dependence makes it more vulnerable than its Baltic neighbours, Estonia and Latvia.

The terminal is therefore of vital importance to developing Lithuania’s energy industry and the name Independence is “symbolic”, said Mr Masiulis. “One vessel can change everything for a country.”

Challenges have arisen, however.

Lithuania has never before imported LNG so had no regulations and laws in place.

Klaipedos Nafta hired specialists from abroad to help develop rules and regulations relating to safety and technical solutions. The project leaders had to ensure that all decisions made at the start in 2010 and 2011 complied with new laws introduced in 2013.

The expectation is that Independence will also offload LNG to smaller LNG carriers for distribution around the Baltic Sea.

By 2020, the Baltic Sea will therefore be highly active in trading and shipping LNG, said Mr Masiulis.

As of today, discussions have started between the three Baltic states over co-operation on LNG trading and shipping in the region.

“What you’ve done is quite remarkable,” said South-Court managing director David Ledesma. “Welcome to the LNG club.”

Independence is due to start operating in December.

in 19/07/2014