Baltics Hastens New LNG Import Plans to Elude Gazprom

Amid the political upheaval in Ukraine, the Baltic region hastens new LNG import plans to elude the Russian gas import in the long-term and decrease considerably the reliance on it in the short-term.

Today, the Baltic States of Latvia, Estonia and Lithuania depend nearly 100 percent on the Russian gas giant’s gas, while Poland imports from it approximately two-thirds of its LNG needs.

“As of now, the being implemented LNG projects amount to 150 billion cubic meters of gas worldwide as the gas demand is mostly concentrated in Europe. It means the large quantity of the US and Middle East-extracted liquefied natural gas, now destined for Asia, will ultimately end up in Europe,” said Massimo Di-Odoardo, analyst at UK-based Wood Mackenzie, an energy research and consultancy company.

Poland looks forward to launching its 5-billion-cubic-meter-capacity LNG terminal in January, with the gas to be imported from Qatar and later from as far away as the United States and Canada.

Meanwhile, Lithuania has set eyes on completing this year the construction of a LNG terminal in the Baltic waters off the seaport of Klaipeda in western Lithuania.

Recently in South Korea-christened LNG vessel-floating repository “Independence” is scheduled for arrival to the city in the fall.

“Once the vessel is here we will be able to funnel the liquefied natural gas into smaller boats and provide smaller Baltic terminals with the gas,” said Rokas Masiulis, head of state-owned company Klaipeda Nafta that is in charge of the LNG project.

With the annual natural gas demand in the Baltic country being at 3 billion cubic meters, Lithuania is thought to be importing 2-4 billion cubic meters of gas yearly from other than Gazprom suppliers.

With the terminal launched in Poland, the country’s consumption of Gazprom gas is expected to tumble from 66 to 15 percent over the next two years, according to Reuters.

Part of the Asia-bound LNG will also fill up Finnish and Estonian gas repositories.

Both countries had agreed to build a single or two separate LNG terminals as the decision on the site is expected to be announced in May.

Natural gas has been quite expensive globally over the last years, which deterred the Baltics from pursuing the terminals.

However in the wake of the flare-ups between Russia and Ukraine and the tensions in the global markets, the LNG price is expected to start declining in the near future- down up to 10-15 percent.

This would allow the gas imported from the US, Canada and Middle East to compete with the Russian gas. Currently Gazprom gas is still considerably cheaper than the potential gas import- $US 8-17 against $US 16-20 for 1 million BTU respectively.

Finding new LNG import markets for the European Union has become an urgent issue after the Russia and EU relations soured following the Crimea’s secession from Ukraine and joining Russia.