Lithuania to get liquid gas terminal in 2014

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By LIUDAS DAPKUS, Associated Press

VILNIUS, Lithuania (AP) — A Lithuanian oil company signed a 10-year, nearly $700 million agreement Friday to lease a liquid natural gas terminal from Norway's Hoegh LNG — an attempt by the Baltic state to reduce its reliance on Russian gas supplies.

Currently Lithuania receives all its natural gas from Gazprom, the state-run Russian energy giant. Energy Minister Arvydas Sekmokas recently said the small country pays the highest price for gas among all 27 European Union members — $490 per 1,000 cubic meters, or about $100 more than the EU average.

With a gas terminal in Klaipeda, a port town on the Baltic Sea, Lithuanian officials hope to diversify and ensure steadiness in their gas supplies, which in the past have been disrupted after spats between Russia and Belarus. All gas deliveries to Lithuania cross Belarusian territory.

According to the deal, Klaipedos Nafta, a state-controlled Lithuanian company, will lease a floating natural gas storage and regasification tanker for a total $689 million over 10 years, after which it will have the right to buy the unit from Hoegh LNG.

The terminal, which will cost approximately $200 million to build and have an annual capacity of 2 billion-3 billion cubic meters of gas, should be launched by the end of 2014.

"The (floating terminal) will help Lithuania reduce its dependency on a single gas supplier and grant access to international gas markets," said Rokas Masiulis, the chief executive of Klaipedos Nafta.

In recent days, Lithuania and Gazprom have locked horns over the Baltic state's decision to unbundle — or separate the distribution and transportation segments of — its gas market.

Though Lithuania's decision follows an EU directive, Russian officials have slammed the move because Gazprom owns approximately one-third of both Lithuania's distribution and transportation networks. Under the government's plan, Gazprom will have to sell its share in the transportation network.

On Thursday, Gazprom announced that it had filed suit against Lithuania in international arbitration court over the issue.

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