Lithuanian Energy Group Calls for Rule Change on LNG Imports

Maritime Activity Reports, Inc.

March 23, 2015

Lithuania's state-owned energy group Lietuvos Energija said on Monday national rules had to be changed to allow it to sell some liquefied natural gas (LNG) cargoes it had contracted from Norway's Statoil in the global market as domestic demand falls.
Lithuania opened an LNG import terminal last year seeking to reduce its dependence on former Soviet master Russia and to diversify supplies, including buying LNG from the United States in the future.
To prevent Russia's Gazprom from dumping prices and keeping the terminal idle, the government has imposed a minimum level of LNG the country's regulated heat and power producers have to buy.
But even this minimum volume -- 540 million cubic metres (mcm) per year or the equivalent of six or seven cargoes -- appears too big as consumption falls.
"In order to have more flexibility to balance the terminal's operations with gas consumption and to use opportunities in the market to get the best value for consumers while ensuring energy security, we need to adjust the legal basis (for LNG imports)," Dalius Misiunas, chief executive of Lietuvos Energija, said.
A company spokeswoman said flexibility was needed to have an opportunity to sell some LNG cargoes elsewhere if necessary.
Natural gas consumption fell to 2.5 billion cubic metres (bcm) last year in Lithuania from 2.7 bcm in 2013, partly due to warmer weather and increased use of biomass for heating.
LNG importer Litgas, a subsidiary of Lietuvos Energija, could end with a surplus of 150-200 mcm of gas this year, and it could rise to 240 mcm next year, Baltic news agency BNS reported last week, citing sources.
Litgas signed a five-year contract with Statoil last year to import 540 mcm of natural gas annually. It received the first cargo in December. Another three cargoes are scheduled to arrive by October.
It plans to store up to 100 mcm of gas at the Incukalns underground gas storage site in neighbouring Latvia, but injections there are only possible during the summer season.
(Reporting by Nerijus Adomaitis; Editing by Janet Lawrence)
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