[Premium] Lithuania Eyes Chunk of Latvian Market
Lithuania's natural gas supply and trade company Lietuvos Duju Tiekimas (LDT), the gas trading arm of state-controlled energy holding Lietuvos Energija, has signed a supply contract with Latvenergo, Latvia's largest gas consumer. It expects to gain a 10 % chunk of the neighbouring market this year.
By doing so LDT would become Latvia's largest supplier, after Latvijas Gaze. LDT CEO Mantas Mikalajunas told Lithuanian media that LNG would make up the bulk of the 1.2 TWh of gas that the company plans to sell Latvia this year. "Practically all the gas will go (to Latvia) via the (Klaipeda) LNG terminal," he said.
Two US LNG cargoes of around 140,000 m³ each are to be delivered to LDT in August and September.
In late June, LDT signed a gas supply contract with US Cheniere Marketing International and soon after bought a cargo of that size. “The company took advantage of the surplus of LNG and lower gas prices on international markets as well as low-cost gas storage conditions in Latvia’s Incukalns underground natural gas storage facility,” LDT said. In mid-July, LDT bought another similar volume batch of US LNG from Spain’s Gas Natural Fenosa.
It will be sourced from Cheniere’s Sabine Pass liquefaction terminal in Louisiana, the sole US facility exporting shale gas. It is slated for delivery at the port of Klaipeda, where the Hoegh-owned floating storage and regasification vessel Independence is moored, in mid-September.
In 2017, LDT signed a deal with Koch Supply & Trading for LNG supplies throughout the year.
Namely the variety of non-binding contracts with global LNG players is behind the success of LDT in Latvia, claims Dominykas Tuckus, a member of the management board at Lietuvos Energija (Lithuanian Energy).
"This is not a one-off deal. The Lietuvos Energija Group has already had trading activities in the other Baltic countries and we still manage to find ways to maintain our competitiveness. We are probably among the few in the Baltic states with a wide range of commercial contacts with global LNG suppliers and we have a sufficient portfolio that allows us to optimally regasify that amount," he said.
Mikalajunas said some of the US-sourced gas will be used in Lithuania; some will go to Latvian companies, and yet another part will be stored in Latvia’s Incukalns underground gas storage facility. He said the trade was sluggish at the start in June but picked up in July when Latvian companies had to decide whether they would continue to purchase gas from the former monopolist Latvijas Gaze or look for new suppliers.
"Most companies made no moves and stayed with Latvijas Gaze, but they can change the supplier at any time. This is where the market potential lies," Mikalajunas said.
Mikalajunas says LDT has already started pumping gas to the Latvian storage facility, but he did not disclose any details, saying that it was not clear yet how much gas would have to be stored there. "It will depend on consumption in Lithuania and Latvia, but it will definitely be more than the mandatory amount to be stored," he said.
Latvenergo told NGW that LDT’s part in Latvenergo’s gas supply total is modest so far and is subject to the market trends.
“It comprises a couple of percent, I’d say. I am not in the guessing game to say whether LDT has potential of increasing the share up to 10% this year, yet one fact has to be considered by all: the quantity primarily depends on the price it (LDT) pays for the suppliers of US gas. With the market fluctuations, both the price and the quantity we’re buying are subject to revision, so any forecasts on the LDT imprint in Latvian gas market do not necessarily flesh out,” a spokesman said.
Linas Jegelevicius