Klaipedos Nafta (KN) intends to buy a floating storage and regasification unit (FSRU) by the end of 2024.
There is currently an FSRU in Lithuania, the Independence, which is leased from Norway’s Hoegh LNG. KN has said its purchase might be the Independence or it may be another vessel. A decision will be taken by the end of 2022.
Having an LNG terminal “will provide economic benefits for Lithuania and gas consumers of the region after 2024”, said KN Klaipėda LNG’s director Arūnas Molis. LNG imports “ensure competition in the gas market and contribute to the energy security of the state. In turn, this provides Lithuania with opportunities for regional leadership in the energy sector and for KN to further actively develop the cross-border LNG chain of value.”
KN intends to borrow 135.5mn euros ($150mn) from the Nordic Investment Bank (NIB), to pay the rent on its LNG unit. The debt will be secured with a state guarantee.
The company also said it intended to reach a deal with banks on securing financing for the acquisition of the FSRU by the end of April 2020. It will also seek approval of state aid by the European Commission by the end of May 2021.
The company is working to reduce costs on the terminal by 27 million euros ($29.9mn) per year from 2020. Molis said that, in order to achieve the cost savings, all participants must work together.
“The entire process of achieving the overall goal of securing long-term LNG supply to the country remains extremely complex, so at this point we are keeping all decisions focused within KN and we are focusing on the next, but no less important phase related to the acquisition of the LNG storage unit,” said Molis.
Plans for streamlining the import of LNG followed closely after an announcement that Estonia’s Elenger had become the fifth user of the Klaipėda LNG terminal. Elenger’s first cargo is expected to reach the facility in the second half of November. Other users of the plant include Lithuania’s Imlitex, Estonia’s Eesti Energia, Ignitis and Achema.
Molis was quoted as saying that the terminal had demonstrated it could supply LNG to the region as a whole. “Customers continue to benefit from low LNG prices and our infrastructure allows them to provide gas to customers outside Lithuania at a much more competitive price. We are sure that new terminal users are attracted not only by favourable gas prices on international markets, but also by [the] reliable and smooth operation of Klaipėda LNG terminal, as well as flexible technological and planning decisions made for our customers.”
The FSRU has received 31 vessels in the first three quarters of the year, versus eight for the same period in 2018.
The Klaipėda LNG terminal has been running for five years and KN is growing in confidence. In October, the company said it was engaged in talks on the provision of terminal services for a facility in Brazil’s Porto do Açu.