LNG terminal frees Lithuania from Russian gas dependence

Lithuania will be able to survive without Russian gas after its liquefied natural gas (LNG) terminal starts up soon, redrawing the energy map for the Baltic States, President Dalia Grybauskaite said.

The floating LNG import terminal at the port of Klaipeda is planned to open before end of October, ending the supply monopoly of Russia’s Gazprom and isolation from global gas markets. Commercial deliveries are due to start after the terminal’s testing in the beginning of 2015.

Importing super-cooled gas by tankers will not only ensure Lithuania’s energy security, but transform relations with its former Soviet master, Russia.

Lithuania will be able to meet all the gas needs of its 3 million citizens, and also supply LNG to Baltic neighbors Latvia and Estonia.

“We will have no dependence on Gazprom supplies. In the case of gas supply disruptions, our terminal can serve and fulfill about 90 percent of the three Baltic states’ gas supply needs,” Grybauskaite said.

The terminal will have a capacity to supply 4 billion cubic meters (bcm) per year compared to less than 5 bcm of total consumption of the three Baltic states. To supply them, Lithuania needs to upgrade its pipelines to Latvia, which is expected to be done by end-2015.

Initially, Lithuania plans to buy 0.54 bcm of gas per year, enough to cover about a quarter of the its gas needs, from Norway’s Statoil .

Its long-term gas supply contract with Gazprom expires at the end of 2015.

Should Gazprom cut supplies, Lithuania will look to buy more LNG cargoes on the spot market, and had a month-long reserves at Latvia’s Incukalns underground gas storage, Grybauskaite said.

“So really, we don’t care anymore (about Russia gas supply cuts)… I’m not concerned about gas supplies for the upcoming winter, at least for Lithuania.”