LITGAS signed a Memorandum of Understanding in regard to gas supplies from the U.S. terminal Delfin LNG
Natural gas supply and trading company LITGAS, part of the Lithuanian state controlled Lietuvos Energija energy company group, signed a memorandum of understanding on February 26 with Delfin LNG LLC – the first offshore floating liquefaction project in the U.S.
It is expected that Delfin LNG’s deepwater port, located in Louisiana, will be operational in 2019.
“We are actively investigating the potential supplies from the U.S., signing MOU with one of the first floating natural gas liquefaction project developers marks a significant step towards further potential cooperation, which in the long run can contribute to the objective of diversification of gas supplies in Lithuania”, General Manager of LITGAS Dominykas Tuckus said. The signed memorandum of understanding is not binding in terms of selling or buying LNG.
It is expected Delfin LNG will be the first floating offshore liquefaction project in the U.S. Floating liquefaction is environmentally friendly, economical at small quantities, and offers the flexibility for producers to enter into shorter duration contracts with a wider pool of customers. Delfin will source pipeline quality feed gas from the liquid US natural gas market, and its liquefaction vessels will use proven technology that has been in use for over 40 years.
In recent years, U.S. gas production has increased due to the shale boom. However, the U.S. gas supply to Europe and elsewhere has until now been unavailable. The first LNG export terminal in the United States is expected to start operation in the second half of 2015.
It is estimated that LNG projects already approved by U.S. authorities will increase global supply by 30 billion cubic meters per year by 2018 – it compares to about 10 percent of current global LNG market. By comparison, the Baltic States consumes annually about 4 billion cubic meters.
Due to warmer than normal winter, the slowdown in economic growth in Asia, the Asian LNG prices dropped to record lows. Therefore it is expected that the LNG from Atlantic Basin will become uncompetitive in the Asian region and more LNG will be transported to Europe – this should increase the supply and push prices down.
LITGAS has 15 non-binding master trade agreements with companies supplying approximately half of world’s LNG and also has possibilities to buy natural gas for other Lithuanian importers.
Source: UAB LITGAS