Designated Supply

As a designated supplier LITGAS has the obligation, for a period of five years starting from January 1, 2015, to import through the Terminal the minimum requited quantity of natural gas—0.54 bcm of natural gas (around 950 thousand cubic meters of LNG) annually and sell it to state-regulated electricity and heat producers.

 

The minimum required quantity is needed to ensure a stable regasification process at the LNG Terminal under minimal uninterrupted operation regime.

 

This operation regime ensures that the Terminal has access to alternative sources of gas imports, enables the development of a competitive market for other Lithuanian and Baltic suppliers and makes it possible for consumers to import more natural gas through the Terminal at any time.

 

As part of the designated supplier’s mission LITGAS took over and proceeded with the procurement procedure started by AB Klaipėdos Nafta back in 2012 and in August, 2014 signed a five year-long (2015–2019) contract for the minimum required quantity with the Norwegian energy company Statoil which offered the best terms during the international procurement procedure.

 

This contract introduces new natural gas pricing in Lithuania, pricing that is linked to the European natural gas markets. The formula for calculating gas price is linked to the UK’s National Balancing Point (NBP), the largest European natural gas exchange, index.

 

The contract also provides for a possibility of developing new commercial activities in the Baltic Sea region, i.e. LNG transloading.

 

LITGAS was also responsible for ensuring the supply of liquefied natural gas required to test Terminal’s operation. Out of 16 proposals by 9 different suppliers the Statoil’s proposals was selected. Gas for testing—around 100,000 cubic meters of LNG (around 60 mcb of gas)—was delivered to the Terminal in Klaipėda on October 28, 2014.

 

Major milestones

October 22, 2012 AB Klaipėdos Nafta announces purchasing of liquefied natural gas in the international business daily Financial Times.

 

October 29, 2012 AB Klaipėdos Nafta receives letters of interest from 16 companies wishing to participate in the LNG procurement procedure.

 

December 17, 2012 AB Klaipėdos Nafta establishes UAB LITGAS. The newly established company is to engage in the trade and/or supply of LNG.

 

September 10, 2013 AB Klaipėdos Nafta transfers to LITGAS all functions, rights and obligations relating to the trade in liquefied natural gas and supply of natural gas. Transfer of LNG purchasing operations included the transfer of proposals for LNG supplies from 16 companies which expressed interest in the procurement procedure. Having taken over the procurement procedure UAB LITGAS held meetings with participating suppliers and asked them to update their proposals.

 

October 15, 2013 Lietuvos Energija becomes the majority shareholder in LITGAS holding 67% of shares. The move made was meant to implement the requirements of the EU’s Third Energy Package and Lithuanian Law on Energy to split energy supply and generation from transmission.

 

November 29, 2013 LITGAS receives updated proposals for LNG supplies under a 5-year contract of supply.

 

February 3, 2014 Out of 16 suppliers on the main list 3 potential suppliers which offered the best terms are short listed.

 

February 28, 2014 LITGAS completes the first stage of direct negotiations with three potential suppliers aimed at clarifying terms and conditions of the proposals, their interpretation, negotiating positions as to agree on the best possible terms of supply.

 

May 26, 2014 LITGAS presents negotiation results and key terms and conditions of the future contract to the Lithuanian Government and receives approval for awarding the contract to Statoil and signing the contract once technical terms of the contract are finalised.

 

August 21, 2014 LITGAS signs the contract for the supply of the minimum required quantity of LNG with the Norwegian energy company Statoil which offered the best terms.

 

December 23, 2014 The first commercial cargo of the minimum required LNG quantity arrives to the Klaipėda Seaport.

 

January 1, 2015 The start of supply of obligated natural gas purchases from the LNG Terminal to regulated energy producers.

 

Baseload LNG cargo delivery schedule (2014-2015)

Date Carrier name Delivered LNG volume (m3)
2014 12 23 Arctic Aurora 140 906
2015 03 01 Golar Seal 146 180
2015 04 30 Arctic Voyager 137 897
2015 07 20 Arctic Princess 142 421
2015 09 13 Gaslog Salem 141 597
*2015 12 15-16 Arctic Voyager approx. 140 000

* planned