LITGAS, a natural gas trading company, part of Lietuvos Energija energy company group, has signed a reshaped baseload supply agreement with Statoil.
The amendments of the agreement will help to reduce the operation costs of Klaipėda’s liquefied natural gas (LNG) terminal by a third and, in turn, energy prices for final consumers.
“We are pleased we have reached mutually acceptable agreements enabling the reduction of the terminal operation costs and energy prices while ensuring continuous operation of the terminal”, said Dr. Dalius Misiunas, Chairman of the Board and CEO at Lietuvos Energija. “According to the current situation in the market and the latest forecasts, we estimate that the amendment of the agreement could result in the reduction of gas consumer spending for the LNG terminal component in the gas prices by more than third – approximately by EUR 33.8M.”
“A flexible attitude shows our mutual intention to maintain a long-term, trust-based collaboration which already bears fruit. Lietuvos Dujų Tiekimas, which is a part of Lietuvos Energija group, has already purchased LNG from Statoil at competitive prices. Lietuvos Energija group has also helped in establishing contacts and has contributed to the successful implementation of Achema and Statoil transaction and can offer its expertise to other gas consumers in the region seeking to diversify their supply. In addition to this, “Statoil” and LITGAS are working on establishing joint activities in small scale LNG business”, said Dominykas Tuckus, Member of the Board and Generation and Services Director at Lietuvos Energija.
The amendments of the agreement dedicated to ensure state regulated baseload supply of LNG necessary to maintain the uninterrupted operation of the LNG terminal, include the annual amount of gas delivered to the LNG terminal, the duration of the agreement and the pricing. The Government of the Republic of Lithuania has approved these amendments.
Considering the decreasing consumption of the natural gas in the energy sector, which is obliged to use the gas from the LNG terminal, the annual amount was reduced by a third – from approximately 5.5 TWh (about 540 million cubic meters) to approximately 3.6 TWh (350 million cubic meters). The duration of the agreement has been extended until the end of 2024 and it will coincide with the duration of the leasing agreement of FSRU Independence.
The pricing formula has also been amended, which brings the prices of the LNG supplied according to this agreement closer to those supplied by the pipeline. According to the LITGAS forecasts, the average import price of LNG in 2016 may be approximately EUR 16-21 per MWh, whereas last year it was EUR 29.04 per MWh.
Due to reduced infrastructure costs, spendings of consumers who use central heating should decrease by EUR 11.3M, spendings of electricity consumers – EUR 9.8M, industry – approximately EUR 7M and residential and business natural gas consumers should save respectively EUR 2M and EUR 3.6M.