Lithuania's Russian LNG Cargo Sparks Row

Lithuania’s state-owned Lietuvos Energijos Tiekimas (LET) has sparked a controversy, buying some LNG from a plant owned and operated by the Russian gas company Novatek. 

LET reportedly bought one 6,500m³ cargo and Achema, a fertilizer producer and the Baltics's single largest commercial gas consumer, bought two from the Vysotsk terminal last week, with a fourth arriving over the weekend, believed to be fertiliser manufacturer Achema's.

“Achema, a private company, can buy gas wherever it wants, but I have doubts whether our state company should be buying liquefied natural gas from a businessman belonging to [Russian president Vladimir] Putin’s close circle, said conservative MP Laurynas Kasciunas, referring to Leonid Mikhelson. He lodged a request for an urgent investigation by parliament's national security and defence committee (NSDC), believing that it is not Lithuania's job to help Russian oligarchs avoid sanctions.

Former energy minister Arvydas Sekmokas told NGW the acquisition has to be scrutinised both politically and from the legal standpoint. Sanctioned companies, and Novatek too, are looking for intermediaries to circumvent the embargo and sell their goods on international markets, he said.

But a former head of Lithuania's energy pricing commission Vidmantas Jankauskas said too much was being made of the deal with Novatek. He told NGW: “I don’t see a big difference if the gas comes from Gazprom or Novatek. It would be very foolish to prevent national gas traders from buying Novatek gas. As it is cheaper... any ban would affect them adversely. Furthermore: they could lose competitiveness in spot gas markets."

LE did not go into details but told NGW that the company bought the cargo from the international commodities trader Trafigura and resold to it later to multiple buyers on gas spot market. LET does not have a contract with Novatek and it said it was not the buyer of the fourth cargo.

Lietuvos Energija's director of international expansion Mantas Mikalajunas said "clear rules“ need to be set both for state and private energy companies' gas purchases, in "a very competitive environment." He said any (gas) acquisition, regardless of its origin, means more competition for Gazprom and lower prices. Even if LE does not do so, other companies will continue buying gas including from Novatek, and selling it directly to consumers on the gas exchanges, he said, meaning LE would lose out. 

Sources have said more shipments of Novatek LNG for Achema are expected to arrive in Klaipeda by June. Klaipedos Nafta plans to receive around ten small-scale LNG carriers this year.

Novatek and Russia's state-controlled Gazprombank, own the Vysotsk LNG terminal, launched by Putin in April. The former has 51% shares and the other 49%. The capacity of the terminal is about 660,00 metric tons/yr and it can carry out bunkering operations.