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    Lithuania Hopeful of Early LNG Vessel Buy-out

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Lithuania’s prime minister Algirdas Butkevicius has returned from Norway hopeful that Hoegh’s floating LNG storage and regasification vessel (FSRU),

by: Linas Jegelevicius

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Lithuania Hopeful of Early LNG Vessel Buy-out

Lithuania’s prime minister Algirdas Butkevicius has returned from Norway hopeful that Hoegh’s floating LNG storage and regasification vessel (FSRU), the symbolically-named Independence, may be bought out early. The contract was for ten years and ends in 2024.

Both the prime minster’s office and Lithuanian energy experts are now more optimistic. “Talks will be ongoing on the purchase of the vessel. We have touched upon this issue at the political level and all other discussions have to be held at the level of individual specialists,” Butkevicius said after meeting with Hoegh LNG’s board chairman Morten Hoegh and president Sveinung Stohle.

The cost of the Klaipeda jetty, operated by Klaipedos Nafta, is reportedly $189,000/day, which works out at $689mn over the ten years in today’s money.

Speaking to LRT television reporters is Oslo, Morten Hoegh, chairman of the board of directors at Hoegh LNG, did not rule out selling the vessel to Lithuania earlier, saying that the company was “open to our partners’ proposals.”

The CEO of Klaipedos Nafta, Mantas Bartuska, told BNS, Lithuania’s news agency, that there were no more detailed discussions about the acquisition of the vessel. The company is focusing on the FSRU acquisition after the charter contract expires.

Klaipedos Nafta had asked the Norwegians earlier about buying the FSRU earlier than 2024, but got a negative reply.

Mantas Dubauskas, the Lithuanian energy minister’s advisor, hinted that talks will continue. “That talks are ongoing is a good sign. But whether they produce anything or not (in the future) is too premature to say. No new date for another round of talks has been set yet,” Dubauskas told NGE.

Meanwhile, Vidmantas Jankauskas, a prominent Lithuanian energy expert and a member of the EU’s Eastern European Programme’s energy committee, believes that the Norwegians will eventually give in to Lithuania and sell the vessel early.

“From what I see is trending on the meetings in Lithuanian and foreign press, the mood this time was quite good on both sides,” Jankauskas told NGE.

The fall in oil prices and low gas demand have meant a very low utilisation rate for Independence. Russia continues to pump gas into LIthuania, albeit at lower prices, and has added gas auctions, for delivery near the Belarus border, to its range of offerings.

Small-scale LNG venture planned with Statoil

While in Norway, the Lithuanian representatives always met with Statoil’s top executives and discussed the idea of setting up a joint venture with Lithuania’s gas trade company Litgas for small-scale liquefied natural gas trade.

Several weeks ago, Butkevicius criticized the joint venture establishment process for its slow pace and asked for the talks to be finalized within two weeks. “We spoke with Statoil about the establishment of a joint venture. It is my wish that we come to final decisions as soon as possible,” he said while in Norway.

According to Butkevicius, Lithuania wants “clarity” regarding Statoil’s plans, because Klaipedos Nafta, the Klaipeda LNG terminal’s operator, is building a LNG reloading station that the planned joint venture would use.

Butkevicius also spoke with Statoil officials about the price of gas sold to Lithuania. In his words, Statoil seeks long-term cooperation with Lithuania.

According to Dalius Misiunas, CEO of Lietuvos Energija (Lithuanian Energy), Litgas’ shareholder, final decisions on the planned joint venture could be made in June to July.

It is planned that the joint venture will order a bunkering vessel, which will supply gas as fuel to ships in the Baltic Sea, this year after talks with potential builders and will start operating in 2018.

In the meeting with Norwegian PM Erna Solberg, both premiers noted that the bilateral cooperation has been “very successful” but could be “more intensive.”

 

Linas Jegelevicius

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