Norway will be Lithuania's 2016 Top Gas Supplier

Posted by Joseph Keefe February 8, 2016

Lithuania will import more gas from Norway than from former sole supplier Russia in 2016 after developing infrastructure to support liquefied natural gas (LNG) imports, the country's energy minister said on Monday.

Russia's Gazprom had enjoyed a supply monopoly until the end of 2014, when Lithuania opened a floating LNG import terminal to reduce energy dependence on its former Soviet master. That allowed it to import gas from Norwegian tankers, as well as via pipeline from Russia.

Volumes of LNG imports to Lithuania are expected to triple this year after two new importers signed deals with Norway's Statoil, the terminal's operator Klaipedos Nafta said on Friday.

Lithuanian gas supplier Lietuvos Duju Tiekimas (LDT) and privately owned nitrogen fertilizers producer Achema have agreed to buy LNG from Norway under short-term deals.

"LDT and Achema's agreements with Statoil are clear proof that there is real competition to Gazprom's gas in the market," Lithuania's Energy Minister Rokas Masiulis told Reuters in an email.

"Based on current plans, Statoil's market share (in Lithuania) will increase to more than 50 percent this year," he added.

New deals mean that supplies via the LNG terminal will increase to more than 1 billion cubic metres (bcm) in 2016, while total Lithuanian demand is expected to be around 2 bcm.

LDT's long-term supply contract with Gazprom expired last year, and the utility, which supplies gas to households, said it had to sign a short-term deal with Statoil cover the shortage.

It has still to negotiate a new deal with Gazprom.

"Gazprom's market share in the future will depend on prices and other commercial conditions," Masiulis said.

"There will be no political decisions on this. All decisions on gas purchases are commercial," he added.

Klaipedos Nafta has said it expected to receive 12 tankers until end-September compared with a previously expected four. Statoil already had a contract with Lithuania's Litgas, which was revised in January.

Lithuania is a small market for Gazprom, with its consumption accounting for slightly more than 1 percent of Russia's total gas exports to Europe.