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International Internet Magazine. Baltic States news & analytics Saturday, 23.10.2021, 19:56

EBRD gets concerned over Lithuania's plans to cut LNG purchase from Equinor

BC, Vilnius, 02.12.2020.Print version
Lithuania's Energy Ministry's proposal to the country's government to reduce from four to two the number of LNG shipments the country's gas supply company Ignitis buys from Norway's Equinor every year and also to compensate only 10% of the difference between the gas purchase price and the market price has raised concern not only for the Lithuanian company's key shareholder, the Finance Ministry, but also the European Bank for Reconstruction and Development which owns 4% of Ignitis, informs LETA/BNS.

Speaking with BNS, the Finance Ministry has confirmed that it has turned to the country's Special Investigation Service for it to carry out an anti-corruption assessment. The SIS told BNS such an assessment is now ongoing and its conclusions would be published later.

The Energy Ministry has also confirmed it to BNS that it has received a letter from the EBRD representative for the Baltic states and will respond after it get acquainted with it. Based on information available to BNS, the letter to Minister Zygimantas Vaiciunas states that his ministry's hasty action, without commercial interests being taken into account, might reduce Lithuania's investment attractiveness.

"The issue of the necessary amount is neither being urgently considered, nor is unexpected for Ignitis," the Energy Ministry said.

It also points out to the fact that its proposal has finally given the needed push as Ignitis has recently informed it will immediately launch negotiations with Equinor on changes to the existing contract.

In November, the Energy Ministry said it's proposing to the government to significantly reduce the LNG terminal's maintenance costs. If the Seimas and government approve, costs for consumers to secure the terminal's minimum operation would go down from around 25 million euros this year to 6.5-7 million euros next year.

The ministry will propose to the government to cut the number of necessary LNG shipments purchased by Ignitis, part of Ignitis Grupe, from four to two per year. Under the existing 10-year contract, these shipments are bought from Norway's Equinor (formerly Statoil) for an above-the-market price.

Moreover, the Seimas will be asked to the change the LNG terminal law and to compensate to Ignitis 10-%of the difference in the price between the LNG purchased from Equinor and that acquired on the market for the remaining two shipments. Currently, gas consumers compensate the full difference for four shipments, with this amount standing at around 25 million euros and estimated to rise to 35 million euros next year.

Under the contract with Equinor, signed in 2014 and later amended, Lithuania committed to buy the minimum amount of LNG – four large vessels a year – necessary for the operation of the Klaipeda-based terminal for ten years. 

Energy Minister Zygimantas Vaiciunas told BNS earlier the Equinor contract is not flexible. The minister said he asked the Norwegian government last year to mediate and amend the contract but did not receive a response.

As global LNG prices have gone down considerably in recent years, Equinor gas has become much more expensive.

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