LITGAS begins selling natural gas from Lithuanian LNG cargoes

Gas from the first arrival of LNG into the upcoming Lithuanian import terminal began to be sold through natural gas exchanges GET Baltic and Baltpool on Tuesday, a spokesman from state-owned LNG buyer has LITGAS confirmed.

The gas futures being sold will come from the first cargo, which ICIS understands is due to arrive on 28 October into the terminal’s new floating storage regasification unit, named Independence. The regasification unit will arrive at the terminal the day prior to this, and will offer more than 4 billion cubic metres (bcm) per year of nameplate send-out capacity.

Up to 50 million cubic metres (mcm) of gas from the cargo will be offered on the exchanges until 31 December.

Initial trading on the exchanges will be treated as a test in order to evaluate how to go about meeting the needs of the market for 2015, said Dominykas Tuckus, general manager of LITGAS.

Norwegian producer Statoil has signed an agreement with LITGAS to supply 550mcm/year of regasified LNG at the terminal over five years.

However, third-party access to capacity at the terminal has attracted little interest from neighbouring countries. In August, 760mcm of seasonal capacity remained available between January and September 2015, with 2bcm still available on a long-term basis for Gas Year 2015. These capacities are still up for sale.

LITGAS will use 402mcm of regasification capacity at the terminal during its first transitional gas year.

Terminal operator Klaipedos Nafta launched a market consultation last month to determine the potential demand for LNG reload services from 1 January 2015. The terminal operator is understood to have received interest from market participants for LNG bunkering, trucking and rail transport services and is now calling on Poland, Latvia and Estonia to participate. The company is also considering plans to set up a small-scale LNG reloading station in Lithuania, according to a source close to the matter.

Reload capacity on offer from the terminal ranges from 5,000 cubic meters to a conventional-sized cargo.

Lithuania consumes about 3bcm of gas every year, which has traditionally been supplied via pipeline by Russian producer Gazprom. New LNG supply in Lithuania will elevate the Baltic region’s bargaining position in renegotiating gas prices under existing supply contracts with Gazprom. Ranjana Kaushal