October 27, 2015 / 1:33 PM / 4 years ago

Lithuania aims to cut Russian gas imports further

* Gazprom’s long-term supply contract expire in Dec.

* Lithuania eyes LNG imports from the U.S.

* Overall gas demand seen falling due to biomass use

By Jessica Jaganathan

SINGAPORE, Oct 27 (Reuters) - Lithuania wants to cut Russian gas imports more after opening a liquefied natural gas (LNG) terminal, while overall demand is seen falling due to conversion to biomass in central heating, its energy minister said on Tuesday.

Lithuania is still negotiating with Russia’s Gazprom and other suppliers, including U.S. LNG company Cheniere Energy Inc , Rokas Masiulis told Reuters at Singapore International Energy Week.

“If we get a good price (with Gazprom), we will renew (the contract), if not we will switch completely to LNG,” he said. “We would like more non-Russian gas in our system and U.S. gas fits our gas formula and its composition is similar to Russian gas.”

The Baltic state’s long-term gas supply contract with Gazprom expires in December, but it still has unused quantities of gas, equivalent to about 1 to 1-and-a-half years of consumption, which it can roll over to next year.

Lithuania’s LNG importer Litgas also plans to import 540 million cubic metres of gas from Norway under a five-year deal with Statoil.

Its gas consumption is expected to fall to between 2 and 2.5 billion cubic metres in 2016, down at least a third from two years ago as it moves to increased use of biomass for central heating.

With production of heat from biomass being 30 percent cheaper than natural gas despite lower gas prices, biomass now makes up 70 percent of heating industry, Masiulis said.

Lithuania has a large furniture industry produce abundant wood chips with the surplus used to fire heat boilers.

As domestic gas demand is declining, Litgas asked the government to allow it to re-export some LNG cargoes contracted from Statoil, and parliament expects to decide on this in December.

The LNG terminal, opened last year, will still have to import at least from 400 to 500 million cubic metres per year, Masiulis said.

It has a maximum capacity to import up to 4 billion cubic metres (bcm) of gas per year, enough to meet about 80 percent of all the needs of the three Baltic states, including Latvia and Estonia. (Reporting by Jessica Jaganathan, editing by Nerijus Adomaitis)

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