OSLO, June 10 Lithuania expects to wrap up
negotiations on an liquefied natural gas purchase agreement in
the third quarter after parliament decides on a minimal offtake
rule to ensure that the new source of gas supply is viable, the
state-controlled trading company said.
The Baltic state plans to lease a floating gas storage and
regasification unit (FSRU) from Norway's Hoegh LNG
for 10 years to provide an alternative source of supply to
Russian pipeline gas starting from 2015. It has yet to sign a
supply contract, however.
The plan was to complete an agreement for LNG supply in the
third quarter, but the talks are tied to the outcome of
parliament's decision on the minimal offtake rule. Such a rule
would ensure the terminal would sell enough gas in competition
with Russian gas export monopoly Gazprom.
"It's not such an easy thing to compete with Gazprom. There
is too much risk that Gazprom could lower prices to undermine
LNG imports," said Tadas Adomaitis, head of gas supplies and
operations at Litgas, a trading arm of Lithuanian oil terminal
company Klaipedos Nafta, which is also in charge of
the LNG terminal project.
A previous plan to require all gas distributors to buy at
least 25 percent of supplies from the terminal was appealed to
the European Commission. The new plan under discussion is to
make power producers that sell electricity under
government-regulated prices buy gas from the LNG terminal.
"We are currently framing LNG sourcing and gas offtake
structures," Adomaitis said.
One potential LNG buyer could be a new 450 megawatt
combined-cycle gas unit at the power plant in Elektrenai, which
could consume about 0.2 billion cubic metres of gas per year, he
The government has said it aims for imports from the
terminal to reach at least 0.7 bcm per year, which compares with
annual consumption of over 3 bcm in 2012.
The Lithuanian terminal would have a maximum capacity to
regasify and supply 11 million cubic metres of gas per day or 4
bcm per year.
(Reporting by Nerijus Adomaitis; editing by Jane Baird)