KN, the operator of Lithuania’s oil and liquefied natural gas (LNG) terminal in Klaipėda, has completed the annual procedure of allocating capacities for the new gas year, until September 2021.
During this procedure, two customers have signed agreements for the regasification capacity of 8.4 terawatts per hour (TWh) of LNG. As a comparison, five TWh were allocated last year.
During the current gas year (from October 2019), 49 gas vessels arrived at the LNG terminal and another 21 gas vessels are expected by the end of 2020. During this period, 2.4 million cubic metres of LNG were delivered and the total consumption of natural gas in Lithuania during this period was 17.3 TWh, whose 87 per cent was supplied through the LNG terminal. Sixty-nine per cent of LNG is imported from Norway, 18 per cent from the US and 12 per cent from Russia.
“In the operation of the LNG terminal, we can see that that the terminal users clearly have a tendency to order free capacities of the terminal during the gas year rather than reserve them during the annual capacity allocation procedure,” commented Arūnas Molis, Head of the KN Regulated Activities and LNG Project Manager. “This practice is due to low global LNG prices, which have prevailed since the beginning of the year, as well as the related dynamics in the spot market. The LNG Terminal allows customers to respond flexibly to current market changes and adjust transhipment and transhipment needs at the terminal accordingly. The users of the terminal highly appreciate such flexibility from the terminal, particularly in comparison with the import of gas through the pipeline, which is unable to provide this flexibility.”
According to Mr Molis, LNG will continue to be the energy source that guarantees transparent pricing, acceptable price levels and the ability to respond flexibly to the demand for natural gas, with the data showing that as much as 34 per cent of the global LNG market transactions are one-off transactions or those under short-term contracts.
“In the case of surplus gas in the market, it is important for suppliers to dispose of the extracted quantities and expand the market and LNG terminal customers in the Baltic States have successfully utilised this, by placing on the scales the costs of gas imported through pipeline and LNG prices in the market for comparison,” continued Mr Molis. “Thus, by having the LNG terminal as an alternative to the pipeline, Lithuanian natural gas consumers receive greater financial benefits over the year than all the annual costs associated with the terminal.”