Russian gas imports via Klaipeda named as risk to Lithuania's energy independence

  • 2020-02-04
  • BNS/TBT Staff

VILNIUS - Lithuanian intelligence warned on Tuesday that Russian liquefied natural gas (LNG) imports through the port of Klaipeda pose a risk to the country's energy independence.

Russia's privately-owned gas producer Novatek, which supplies LNG via the Klaipeda LNG terminal, is closely linked to the Kremlin and its ultimate goal is to gain a dominant position in the Baltic market.

"The biggest risk to Lithuania's energy independence comes from Russia's aim to maintain its dominance over the Baltic energy markets," the Lithuanian State Security Department (SSD) and the Second Investigation Department under the Defense Ministry said in their National Threat Assessment 2020 report. 

Novatek, which owns a LNG terminal in Russia's Baltic Sea port of Vysotsk jointly with Gazprombank, has sought to enter Lithuania's LNG market since early 2019, according to the report. 

Novatek's priority business activity is to supply LNG to the Baltic countries via the Klaipeda terminal at the lowest market price, the intelligence agencies said. 

"Novatek is able to offer low LNG prices only because of preferential conditions for LNG exports granted by the Russian government," they said. "Therefore, by increasing its trade turnover via Klaipeda Terminal, Novatek is playing a part in Russia's long-term game to restore its dominant position in the regional gas market." 

According to SSD Director Darius Jauniskis, increasing trade volumes are what pose the risk.  

"This is an intermediary company that that simply sells Russian gas," the director said at a news conference on Tuesday. 

"Apparently, this involves the same risk (as with Gazprom), because it is a Russian company, that once a certain amount is supplied or customers get accustomed to (being supplies with) it, (the supplier) may start dictating the terms," he said.

The intelligence agencies said in the report that "although Novatek presents itself as a private and one of the most transparent companies in Russia, there is no doubt that its strategy and goals are coordinated with Russia's top authorities."

Novatek's shareholders include Gennady Tymchenko, a Russian oligarch who is said to be belong to President Vladimir Putin's entourage and is subject to US sanctions. Russia's state-controlled gas giant Gazprom also holds a stake in Novatek, according to them.  

The latest cargo of Novatek gas arrived in Klaipeda in late January. 

Klaipedos Nafta, the Klaipeda LNG terminal's operator, says the Russian company held a 13 percent share of gas imports in 2019. 

The Klaipeda LNG terminal was built in 2014 to end Gazprom's gas supply monopoly in the Baltic countries. 

"As Lithuania diversified its natural gas supply, Gazprom lost its position in the

Lithuanian market and could no longer manipulate prices," the report said. 

"In 2019, Gazprom refrained from making direct influence, but sought to strengthen its activities through loyal intermediaries – businessmen with connections to Gazprom and

involved in gas trading schemes via companies registered in Lithuania and abroad." 

Russia's state-owned energy giant Inter RAO UES also tried to reinforce its position in the Baltic markets in 2019, too, the Lithuanian intelligence agencies noted.

Inter RAO UES "is not only interested in maintaining its positions in the electricity trading markets, but also in influencing decisions concerning the synchronization of the Baltic power systems with the Continental European Network," they said.

"The IRU has an interest in maintaining and increasing the volume of electricity traded in the region. IRU representatives also tried to establish contacts with representatives of the EU institutions hoping to win their favor."