OREANDA-NEWS. January 24, 2012. Klaipedos nafta AB and Lietuvos energija, AB signed a preliminary agreement today; this was the first step in negotiations regarding the volumes and terms of gas supply from the future liquefied natural gas (LNG) terminal. While the project for the new terminal is being carried out, both parties are obligated to exchange information and clarify data that is necessary for signing the primary contract.

According to the agreement, Klaipedos nafta - the company implementing the project – will aim to ensure that the terminal‘s capacity will meet Lietuvos energija‘s entire gas needs.  In the primary contract, which is expected to be signed by December 31, 2012, the parties will finalize gas volumes, terms of delivery, pricing principles, and distribution of responsibilities. The LNG terminal should begin operation at the Port of Klaipeda by the end of 2014.

“This agreement is important to us not only because of the conditions that it covers, but also because it is a document that attests to confidence in the success of the terminal project.  It also sends us a very clear message that the main players in the energy market understand the significance of the terminal in creating an alternative source of gas supply and abolishing dependency on a single natural gas supplier.  Our aim is to sign similar agreements with the other major natural gas consumers, so that we can get a clear picture of market requirements and expectations,” said Klaipedos nafta CEO Rokas Masiulis during the signing ceremony.

“The future terminal is a particularly significance part of the gas market infrastructure, as it will help ensure the country’s independence from a single gas supplier.  Furthermore, it will guarantee additional opportunities and better prices for gas customers. Our evaluation of the terminal’s prospects is very favorable, which is why we wanted to agree on the principles of cooperation in advance. I am happy that we were the first to do so,” noted Lietuvos energija CEO Dalius Misiunas.

Klaipedos nafta, which is in charge of the terminal project, is currently in negotiations with three suppliers who have submitted tender applications concerning the acquisition of an LNG floating storage and regasification unit (FSRU).  In accordance with the recommendations of lead advisor Fluor S.A., the tender is for an FSRU with a storage capacity of at least 130 thousand cubic meters of LNG.

In September, 2012, Lietuvos energija plans to complete the construction of a combined cycle gas turbine unit. This unit, which will be the 9th at the Lithuanian Power Plant, will be able to generate as much as 25% of the country’s electric demand, and will use 30% less natural gas than the current units. Once it is in operation, the new unit will be the main source of natural gas-based electricity generation in Lithuania.