OREANDA-NEWS. March 10, 2015. SC Klaipedos Nafta (hereinafter – the Company) concluded the Liquefied Natural Gas Terminal (hereinafter – the LNGT) jetty usage agreement (hereinafter – the Agreement) with the Klaipeda State Seaport Authority (hereinafter – the Port Authority).

The main terms of the Agreement inter alia include the following:

1. The Port Authority allows the Company or any legal successors of the company to use the LNGT jetty for a fee;

2. The usage term of the LNGT jetty shall be 50 (fifty) years (of which the last 30 years (or more depending on the Port Authority’s investment into the LNGT jetty pay-off terms) – shall be for the LNGT jetty usage under common usage conditions by the Port Authority);

3. Until the investment into the LNGT jetty of the Port Authority pays-off, the annual usage fee payable by the Company for the usage of the LNGT jetty (hereinafter – the annual Usage Fee) shall be determined by the following formula:

Pkm = It1/20; IRR5% + St, ,

whereas:

• Pkm – the annual Usage Fee;

• It1/20; IRR5%  - Port Authority’s investment into the port’s infrastructure related to the LNGT jetty, exclusively made before the date of transfer of the LNGT jetty to the Company, annual share calculated by applying the investment pay-off term of 20 years from 1 January 2015 and 5% internal rate of return (the project's internal rate of return);

• St - Port Authority’s annual direct costs, exclusively related to the LNGT;

4. Payable annual Usage Fee shall be reduced by deducting from the annual Usage Fee the sum of Klaipeda State Seaport duties collected by the Port Authority from the vessels related to the LNGT activities and the Constant Payment (a fee payable by the Company calculated under the provisions, terms and other conditions set in the Klaipeda State Seaport’s Land Lease Fee Calculation Rules as approved by the Order No. 3-671 by the Minister of Transportation of the Republic of Lithuania dated 15 November 2010 (or under the rules established in the equivalent legal act regulating the calculation of the fee for the usage of the hydro technical constructions at the actual time)), and taking into consideration all accumulated income during the previous year exceeding the annual Usage Fee in accordance with the formula of the Agreement.   

5. In accordance with the Agreement, from the moment the Port Authority’s investment into the LNGT jetty pays-off, the annual Usage Fee shall exclusively consist only of the Constant Payment.

6. The Parties shall have a right to terminate the Agreement only in case of enactment of the new laws of the Republic of Lithuania and / or other legal acts related to the regulation of legal terms regarding the usage of the LNGT jetty.

The main conditions of the Contract inter alia include the following:

The Agreement is concluded inter alia in accordance with the Decree of the Republic of Lithuania Government No. 864 dated 11 June 2012 “Regarding the Decree of the Republic of Lithuania dated 15 February 2012 No. 199 “Regarding the Construction of the LNGT” Amendment”, which 6 clause determined that the execution company of the LNGT project and (or) LNGT operator shall use the jetty for mooring of the liquefied natural gas floating storage unit and shall pay the annual jetty fee calculated in accordance with the requirements of the present decree and other legal acts under basis of agreement with the Port Authority.       

The Agreement shall enter into force upon the approval of the general meeting of shareholders of the Company, as provided for in Article 16.10 of the Articles of Association of the Company. On 17 February 2015 the Board of the Company had approved the conclusion of this Agreement.