Search for LNG partner underway

  • 2011-06-01
  • From wire reports

VILNIUS - A liquefied natural gas (LNG) terminal is expected to be constructed and start operating in the Lithuanian gas market by 2014, reports news agency ELTA. It is estimated that the construction of the terminal will cost approximately 200 million euros, with around 20 percent of the sum to be covered by a private investor.
The U.S. company Cheniere Energy is interested in investment possibilities in the project and has been named as a possible partner.

As Prime Minister Andrius Kubilius said after the first sitting of the commission on implementation of a liquefied natural gas project, concrete territory planning and land transfer issues are being discussed at the moment. It is expected to end territory planning works by mid-July, while a revised construction timetable will be approved in early June.
“We are starting the work on our own, that is, the company Klaipedos Nafta, Klaipeda State Seaport, Klaipeda City Municipality and the government are starting it. By developing and implementing this project, we will find an answer to such questions: do we welcome a private investor, how much should it participate, what kind of investor should it be, etc.,” answered Kubilius to the question on whether the U.S. company Cheniere Energy is really determined to invest in the LNG terminal.

The prime minister agrees with President Dalia Grybauskaite, who last week said that construction of the terminal was proceeding very slowly. According to the prime minister, Lithuania could have had such a terminal a decade ago.
Energy Minister Arvydas Sekmokas assured that the investor in the LNG terminal will be chosen in line will the Law on Public Procurement. The minister says that the terminal will use services of several suppliers so that competition will be created. The U.S., Norway and Qatar are named in the list of possible suppliers. Given the current prices, the gas supplied by Cheniere Energy would be by 20-25 percent lower that that of the Russian gas giant Gazprom.

Working meetings with Cheniere, to supply liquefied natural gas to the Klaipeda LNG terminal, have started. On May 26, Sekmokas was informed by the Cheniere Vice-President for Supply, Trading and Marketing Jean Abiteboul, on his visit to Lithuania, on concrete steps the U.S. company will take. The Lithuanian company Klaipedos Nafta and the Cheniere president signed a memorandum of understanding on purchase and supply of liquefied natural gas on May 11.

The U.S. has huge potential with its rapid development of domestic shale gas projects, while Cheniere plans to liquefy and export shale gas. Klaipeda is one of the first directions of planned export. On May 20, the U.S. Energy Department issued a permit to the American company to export liquefied natural gas from the U.S. and supply it to Cheniere’s partners and clients around the world. Such an export license was the first one granted in the U.S. in the last 40 years.

Lithuania’s own shale gas resources are expected to meet the country’s needs for from 30 to 50 years, if developed. Shale gas resources are possibly situated in south-west Lithuania, extending to the Kaliningrad region and Poland.
Cheniere is a Houston-based liquefied natural-gas terminal owner.

Klaipedos, which is 71 percent-owned by the state, wants to build the country’s first LNG terminal.