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Lithuanian LNG terminal proving to be a player in the global market

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LNG Industry,

The second largest LNG cargo this year will be imported from the US and regasified through the LNG terminal in Klaipeda, Lithuania. Approximately 155 000 m3 of LNG is delivered by the gas carrier Energy Liberty, which reached the terminal on 23 May.

The favourable situation in the international LNG market determined the possibility of purchasing and importing a cargo of this scale from the US to Klaipeda for the commercial users of the LNG terminal. Since the start of 2020, there has been a trend of commercial users of the terminal purchasing natural gas imported to Lithuania for a price that is lower than the weighted average price of all LNG transactions concluded under spot contracts.

The gas carrier Energy Liberty arrived in Klaipeda from Sabine Pass LNG terminal in Louisiana, US. This is the third LNG cargo from the US and the fifth cargo in total for this year. Prior to the arrival of this cargo, the LNG imported from the US accounted for 5.47% of the total amount of imported LNG at the Klaipeda LNG terminal – since the start of the terminal's operations. The US LNG was imported to Lithuania for the first time in August 2017, reaching Lithuania’s market from the Sabine Pass terminal. Earlier this month, 125 000 m3 of LNG has already arrived in Klaipeda from the US.

The intensification of LNG imports from the US was determined by the extraordinary situation in the LNG market, when many European gas storage facilities were filled to maximums and cargos of US producers were available to market participants at attractive prices. The Klaipeda LNG terminal, in turn, provides the terminal users with the opportunity to import LNG from producers in different regions, in response to the changing market situation of spot commodities, thus reducing the cost of energy resources.

According to Dr Arunas Molis, Director of KN LNG, the regionality of the LNG terminal in Lithuania, the flexibility of gas supply, and the transparent pricing are all factors that have a positive impact on LNG demand in the region by taking advantage of the global LNG market opportunities.

“In terms of LNG trade, the US has been a balancing source of the world LNG supply, and Europe has been a balancing source of demand for the past few years. New LNG liquefaction plants are being built and put into operation in the US, resulting in more flexible cargos, which are not necessarily contractually linked to the final buyer. Such cargoes have strong market demand. In this context, our LNG terminal is already recognised as an established market player and terminal users can choose their import sources flexibly and based on their current needs. And not only in Lithuania or the Baltic Sea region as before – according to a recent report published by the EC, Klaipeda LNG terminal, particularly after the connection with Poland, is a competitive way to supply LNG to Ukraine, Belarus and other EU Eastern Partnership countries that see the perspectives of LNG use in the sectors of industry, transport and other sectors,” said Dr. Arunas Molis.

According to Dr. Molis, considering that during a three-month analysis, the average TTF size was higher than the weighted average price of natural gas imports in Lithuania, it can be assumed that terminal users with long-term contracts purchase LNG cheaper. “LNG terminal users choose this gas import alternative themselves by comparing the costs of the product and the entire logistics chain with the corresponding costs of gas imported through the pipeline. Our calculations show that with this alternative, natural gas users receive greater financial benefits per year than the total annual costs associated with the terminal. This phenomenon is particularly pronounced when there is a surplus of gas on the market and it is very important for suppliers to sell their stocks. In this context, it is natural and understandable that we should establish Lithuanian measures to promote the use of LNG, for example, in the DNA plan of the Lithuanian Government for the Future Economy.”

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US LNG news LNG import news