Russia Set to Become Lithuania's Biggest Supplier

In the closing days of 2016, major Lithuanian gas buyers signed contracts with Russia’s Gazprom. which is expected to supply the bulk of the country’s gas needs for 2017. Last year, Norway’s Statoil was the Baltic country’s top gas seller having supplied it 14.3 TWh, or 60%, of the gas demand.

Jonava-based fertilizer producer Achema, which reportedly will acquire around two-thirds, or 870mn m³ of its gas demand from the Russian gas monopoly in the new year, said it would be buying more gas from Gazprom but the remainder will come from Norway’s Statoil through the Klaipeda LNG terminal.

The deputy chairman of  the board of Achema Group Gintaras Balciunas, did not elaborate on the length of the agreement, but noted that, with the seasonal gas price fluctuations, in winter, it is better value to buy gas from Gazprom. “Then their prices are better and the gas is cheaper. As the gas demand drops after the heating season, the price goes down, too, therefore it makes more sense to buy it at the Klaipeda LNG terminal then,” he explained.

He credited the Russian company for providing better supply conditions than those that Achema had last year with Lietuvos Duju Tiekimas (LDT), the gas trade arm of Lietuvos Energija.

Lithuania's symbol of Independence

(Credit: Hoegh)

Achema is expected to consume about 1.3bn m³ this year, an equivalent to 13.4 TWh. It marks a year-on-year increase of 0.1bn m³. About 700mn m³ last year came from Norway's Statoil and another 500mn m³ came from Gazprom.

Gazprom has had to cut its prices to retain market share in Europe. Access to LNG has enabled Lithuania to argue for lower prices from the Russian monopoly, but the LNG tanker that it uses for Norwegian LNG. called Independence, is chartered from Hoegh on a long-term basis and must still be paid for even if not used.

Linas Jegelevicius