First floating natural gas terminal in Lithuania

Published: Tue 28 Oct 2014
A blog entry by Richard Kuprys

Contributed by:

Richard Kuprys
Community and Platform Manager
Engerati

Richard Kuprys's Blog

On Monday the floating natural gas terminal Independence eased into Klaipeda’s (Lithuania) seaport. It was hailed by American and European officials as a strong signal that the stranglehold Russia has on the Baltics and their energy needs can be broken.

The vessel, the Independence, is a floating factory for converting liquefied natural gas into the burnable variety.

The vessel was built in South Korea for the Norwegian company Hoegh, which is leasing it to Klaipedos Nafta under an arrangement that gives the Lithuanians the right to buy it after a decade.

For Lithuania the floating terminal — a faster and generally cheaper option than building a terminal on land. That makes Lithuania’s efforts to break free of Gazprom a significant example of how even countries that are bound by geography and history to Russia’s energy behemoth can find alternatives.

Lithuania is spending 448 million euros, for construction, maintenance and a 10-year lease on the floating terminal, including financing for state-backed loans.

The first shipment of liquefied natural gas, set to arrive on Tuesday from the Norwegian company Statoil, is equivalent to 60 million cubic meters of natural gas. Further shipments from Statoil should reach the equivalent of 540 million cubic meters annually in the next five years. That is a fifth of Lithuania’s needs.

Lithuanian officials say they had already pushed Russia into bargaining — something it has long resisted — when Gazprom cut its gas prices by about 20 percent in May.

The terminal, the only operation of its kind in the region, could become a beachhead to supply most of the needs of the other two Baltic states, Latvia and Estonia, which also rely on Russia for gas.