Lithuania Government Proposes to Allow LNG re-Exports
10.19.2015 - NEWS

October 19, 2015 [Reuters] - The Lithuanian government on Wednesday proposed that parliament allow liquefied natural gas (LNG) importer Litgas to re-sell some of cargoes contracted with Norway's Statoil on the global markets to reduce the supply glut at home.


Lithuania opened an LNG import terminal in Klaipeda last year and signed a five-year deal to buy 540 million cubic metres of gas from Norway’s Statoil annually.

But the plan, aimed at diversifying Lithuania’s energy imports, has struggled due to a move by utilities away from gas to biomass and price falls in Russia’s oil-indexed gas.

Under it, power and heat utilities were mandated by law to purchase set amounts of LNG but Litgas said it should be allowed to export LNG, as well.

“We want a possibility to sell the surplus gas from Statoil not only in Lithuania, but also in the world markets,” a spokesman for Litgas said.

“The mandatory purchase model is not sustainable,” the company said in a statement.

Litgas also called for a change to laws requiring it to import a minimum of 540 mcm of LNG per year.

Litgas said gas demand from the power and heat sector was expected to drop to 2.73 TWh (260 mcm) in 2016 from 6.03 TWh (580 mcm) in 2015.

Without a change in law, Litgas faces having to sell LNG at a loss which would be made up by Lithuania’s energy utilities.

Any extra cost to those firms would likely be passed on to consumers, the company said.

Gazprom cut pipeline gas prices to Lithuania by about 20 percent in 2014 after it became clear that the Baltic state would open the LNG import terminal later the same year.

Litgas said it was selling gas imported via LNG terminal at 29.4 euros per megawatt-hour (MWh) while Thomson Reuters Point Carbon estimates put the price of piped Russian gas imports in Europe for October at 20.80 euros/MWh, including discounts.

Lithuania consumed 2.6 billion cubic metres of natural gas in 2014, including households and businesses, data from the energy market regulator shows.

Lithuanian energy minister Rokas Masiulis has recently warned that consumption could drop to as low as 2 bcm in 2016.

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