VILNIUS - The government has said that it would transfer its 17.7 percent stake in Lietuvos Dujos (Lithuanian Gas 's LG) to the company to set up and operate a planned liquefied natural gas import (LNG) terminal as the state's contribution to its capital investment.
The Cabinet was expected to approve a decision to increase the authorized share capital of Gamtiniu Duju Terminalas (Liquid Gas Terminal - LGT) as The Baltic Times went to press. They were set to contribute 83,030,367 shares of LG, a natural gas import and distribution company, with a nominal value of one lita per share.
The government's Strategic Planning Committee endorsed the decision in early November, Transport Minister Algirdas Butkevicius said.
Neringa Pazusiene, the director of the Law and Public Procurement Department at the Lithuanian Economy Ministry, said that the overall size of the share capital increase would be known after the shares had been valued.
"Independent [evaluators] will be hired through a public procurement procedure to establish the real price of the block of shares. The state will have to retain its 80 percent interest in the company. The other shareholder will invest 20 percent," she said.
Currently, the market price of the state's 17.7 percent stake in Lietuvos Dujos is 127.87 million litas.
LGT was established last month with an authorized share capital of 100,000 litas (29,000 euros). The Lithuanian state holds an 80 percent stake and fertilizer manufacturer Achema, owned by Lithuania's second richest man Bronislavas Lubys, owns the remaining 20 percent of the shares.
Germany's E.ON Ruhrgas International now owns 38.9 percent of LG, while Russia's Gazprom holds a 37.1 percent stake. Small holders own the rest of the company, after Lithuania's 17.7 percent stake.
Achema reported that it plans to invest a total of 300 million to 400 million litas in the project.
The terminal will be built to diversify energy sources that now come mostly from Russia.
LONG TERM INDEPENDENCE
Nemunas Biknius, head of the natural gas and local resources division under the Ministry of Economy told The Baltic Times that the plant was part of the government's long-term strategy and would help diversify energy supply.
"This is important for supply security and diversification of routes. We will still need Russian gas because the new plant will bring us about 1.5 billion cubic meters of gas, but our consumption is bigger than that," he said.
After the closure of the Ignalina Nuclear Power Plant at the end of 2009, Lithuania will have to rely on gas-powered electricity, which is significantly more expensive than with the current scheme.
By building the plant on the Baltic Sea, Lithuania will be able to receive gas from more sources.
"Gas will come via ship from the world market. This could be from North Africa, from Kenya or from Qatar," Biknius said.
Lithuania received 2 million litas from the U.S. government to fund a feasibility study to see if the LNG import terminal could be built in the country.
The U.S. is funding the study because of Lithuania's concerns about energy dependence on Russia.
"Our aim is to strengthen Lithuania's energy security, to have alternative gas supply routes, one of which is an LNG terminal, and we are also eying connecting our gas network connection with Poland," Vytas Navickas, Minister of Economy said after signing the agreement with the U.S. Trade and Development Agency (USTDA) in September.
USTDA Director Larry Walther said this would help Lithuania become more independent and diversified with its energy sources.
"Energy security is an important element of a country's overall national security," Walther said.
"This project has the potential to increase energy security and independence here in Lithuania and throughout the Baltics, since the terminal could serve as an entry point for natural gas destined not only for Lithuania, but for Latvia and Estonia as well," he said.
The study investigated sites for the terminal with a capacity of 1.5 billion to 2.0 billion cubic meters of LNG.
The feasibility study results are expected by 2010 with the plant ready 4 years later in 2014.
Romania has received similar funding for the same purpose.