Energy, Gas, Legislation, Lithuania

According to Dalius Misiunas, CEO of the state energy group Lietuvos Energija (Lithuanian Energy), the price will go down to around 16-20 euros per megawatt-hour (MWh) under the new deal with Statoil, from around 27-30 euros currently.

"We can't disclose the exact figures (...) under the agreement with Statoil. We estimate that the (price) range could be between 16 and 20 euros per MWh," Misiunas said at a news conference on Monday.

The new pricing will apply to the new LNG cargo that was delivered to Klaipeda last week, he said.

"The key achievement is that they have agreed to change the gas price formula to bring the price of gas closer to the price of pipelined gas. As a result of this, LNG supply costs should decline by up to 25%, or 25.5 million euros, annually, which will bring the terminal's maintenance costs down too," Prime Minister Algirdas Butkevicius said at the same news conference.

The terminal's maintenance costs, or the so-called tariff component, will drop by 25.5 million euros per year: to 83.97 million euros, from 109.47 million euros.

It is estimated that this will help heat producers save around 8.5 million euros annually. Electricity consumers will save an estimated 7.4 million euros through the public service obligation (PSO) tariff. The fertilizer manufacturer Achema, the country's single largest natural gas consumer, is to save 5 million euros. Households are to save 1.5 million euros, and other consumers, 3.1 million euros per year.

Gas prices for households using natural gas for cooking and heating should decline by 1 cent per cubic meter starting July, to 65 cents and 41 cents, respectively.

Under the revised contract, four tankers will deliver a total of 350 million cubic meters of LNG to Klaipeda annually. The previous contract provided for 540 million cubic meters of LNG to be delivered by six ships.

Litgas and Statoil in August 2014 signed a five-year contract on the supply of 2.7 billion cubic meters of LNG.

However, amid a decline in gas consumption in Lithuania, the gas trade arm of Lietuvos Energija initiated talks on a ten-year contract and lower annual gas purchase volumes. Also, the price structure and coefficients have been changed as a result of the talks.