Statoil, LITGAS and Lietuvos Dujų Tiekimas will offer a flexible wholesale LNG supply solution to the small scale market
Lithuanian natural gas trading companies UAB LITGAS and UAB Lietuvos Dujų Tiekimas (LDT), both part of Lietuvos Energija energy company group, and Statoil ASA have signed an agreement enabling reliable and flexible wholesale LNG supplies at Klaipeda’s LNG terminal and, thus, contribute to the development of the small scale LNG market in the Baltic region.
“We are very glad that we have strengthened our strategic partnership with Statoil. It is a major step for Lietuvos Energija, Klaipėda’s LNG terminal and for our country. We are entering into emerging Baltic small scale LNG market and the cooperation agreement not only allows to develop a successful business, but creates a potential for Klaipėda’s LNG terminal to become a regional small scale LNG supply center as well. Important to note that this new activity would increase the usage of the terminal which, in turn, allows to lower its operational costs,” said Dalius Misiūnas, chairman and CEO of Lietuvos Energija energy company group.
The companies believe that this segment will continue to grow in the coming years as LNG represents the best technology for marine users to comply with Sulphur Emission Control Area (SECA) requirements and competitive supply solutions are becoming more and more available.
Based on the latest trends in the Baltic Sea small scale LNG market, there is a need for a wholesale supply point of LNG for the small scale LNG market to develop here. Klaipėda’s LNG terminal is conveniently located for LNG bunkering: it is based in the center of the Baltic Sea and can be reached in a day from the central part of sea and within three days from its farthest points.
“Statoil and LITGAS have established an LNG value chain for supplies to the Klaipeda terminal and such cooperation is unique in the region. LITGAS is active at the Klaipėda’s LNG terminal and has experience of working with the national gas grid operator and Lietuvos Dujų Tiekimas. By exploiting these advantages, we can provide services required to ensure reliable and flexible LNG supplies,” said Vytautas Čekanavičius, the acting a Chief Executive Officer of LITGAS.
“As the leading natural gas supplier in Lithuania, supplying gas to over 560 thousand residential and commercial clients, we can cater for flexibility needs and consequently improve LNG offerings at the terminal,” said Mantas Mikalajūnas, the General Manager of Lietuvos Dujų Tiekimas.
The chosen business model involves LNG modulation services at the terminal and the natural gas grid from LITGAS and LDT and wholesale supply from Klaipeda LNG terminal by Statoil to clients for further redistribution to the small and medium scale segments in the Baltic region.
It utilizes the competitive strengths of each party and is expected to generate revenues for Statoil, LITGAS and Lietuvos Dujų Tiekimas respectively, while at the same time contributing to the development of the small scale LNG market in the Baltic region.
This business model provides a foundation for the three companies to start out with small scale LNG activities. These activities would also contribute to lower boil-off costs at the Klaipėda’s LNG terminal which in turn would reduce the cost of the Lithuanian natural gas system.