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Market consultation for FSRU

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LNG Industry,

The operator of LNG terminals KN (AB Klaipedos Nafta) has announced a consultation with market participants regarding the purchase of a floating storage and regasification unit (FSRU) for the Klaipeda LNG terminal. This consultation is part of the FSRU procurement process, which aims to familiarise market participants with the forthcoming procurement and to receive comments and remarks from market participants who can offer a potential solution on the submitted draft procurement documents. The purchase of the FSRU is planned for the second half of this year.

According to the law adopted in 2018, KN must ensure the operation of the LNG terminal at least until 2044. This law obliges KN to acquire and own the FSRU, upon choosing the most economically advantageous solution by the end of 2024.

“Klaipeda LNG terminal consolidated the country’s energy independence, opened access to the global natural gas market and served as a tool for natural gas price pressure in the region. It is, therefore, important to continue to ensure an alternative source of natural gas imports and to maintain energy security and independence. Trends in natural gas consumption, taking into account both the potential of natural gas as an energy resource and the development of the regional natural gas network, show that Klaipeda LNG terminal will play an important role in ensuring competitive, long-term and secure LNG supply to Lithuania and the region, as well as developing small scale LNG trade and transportation by sea and road transport, and thus contributing to the goals of the green economy’, said the Vice-minister of Energy Inga Žiliene.

Klaipeda LNG terminal has been operating since 2014. The FSRU is leased by KN from the Norwegian capital company Höegh for a period of 10 years with the possibility of buyout.

In order to implement the tasks assigned by the state, KN plans to start the procurement process of the FSRU in the second half of this year. The best bid received during the procurement process will be compared to the current solution according to the established cost-effectiveness criteria. A financing mechanism for the purchase of the FSRU has been secured and approved by the European Commission.

According to Darius Šilenskis, Chief Executive Officer of KN, the market consultation is announced for market participants, who may potentially offer the company to purchase the FSRU, to submit remarks and comments on the draft procurement documents, which may be adjusted before the procurement is announced.

“Before announcing the market consultation, we conducted a study with the help of external experts, during which we were able to define certain techno-logical and commercial frameworks for future procurement. Based on the information gathered during this study, we provide market consultation with possible technical parameters of the FSRU, information on its compatibility with existing infrastructure – jetty and gas pipeline – and other important details to ensure full transparency of the procurement process and encourage potential suppliers. After the completion of the FSRU procurement process, the process of choosing its O&M services will be conducted separately: with the help of external experts and in co-operation with the Lithuanian authorities, we seek to find out which FSRU O&M model would be optimal”, emphasises the head of KN.

During the market consultation, indications for draft procurement documents are expected from the market by 3 May 2021. Following the market consultation, the acquired information will be analysed and a decision on the next steps in the vessel acquisition process will be taken.

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