Baltic States – CIS, Energy, EU – Baltic States, Gas, Legislation, Lithuania

Photo: lrv.lt

"Today (ed. – August 21st) is an exceptional day in the history of Lithuania as strategically important liquefied natural gas supply agreement with Norwegian company Statoil has been signed. () For the first time in the history of Lithuania we will have an alternative natural gas import source. () It is an important step towards enhancing Lithuania's energy security and providing conditions which will allow to further reduce gas price for our consumers," Algirdas Butkevicius said at the press conference after signing the agreement.

The head of the Government believes that the alternative will come of use in negotiations with Gazprom.

"Incidentally, yesterday we discussed that negotiations with Gazprom will be renewed. Hopefully the alternative, as well as other instruments, will help negotiate with Gazprom, and the price will not be greater than the current one or perhaps could continue to decrease," said Butkevicius.

Upon signing an agreement with LNG provider, UAB Litgas will have to guarantee that 540 million cubic metres of gas is supplied annually, starting with 2015.

For five years Statoil will be providing LNG terminal with gas for lower than the average global gas market price.

"Talking about pricing, most long-term contracts are signed not at a fixed rate but are based on certain formulas. In our case the formula will be pegged to Great Britain's gas index, which means that imported gas price will correlate with the price in the European Union. () If we look at the fluctuations of the index in the last four months, and apply the formula, the price will vary between LTL 900 (EUR 260) and LTL 1,000 (EUR 290) per thousand cubic metres," noted Litgas CEO Dominykas Tuckus.

The LNG terminal is projected to be launched in late 2014. According to Geir Heitmann, Vice President of Statoil for LNG trading and operations, the first carrier will dock at the terminal around the New Year, whereas six to seven carriers will be arriving each year.