The Seimas granted state guarantees to the implementation of the long-term operation model of Klaipėda LNG terminal

Date

2019 12 20

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The Seimas approved granting the state guarantees of EUR 275 million value to the loan agreements between the Nordic Investment Bank and Klaipėda Liquefied natural gas (LNG) terminal operator Klaipėdos nafta AB intended for acquisition of a LNG storage vessel and restructuring of LNG terminal maintenance costs. 

'I feel happy that the Seimas approved the strategically important and cost-effective decision. It will make reduction of gas price for residents and business possible. At the same time, in the long run Lithuania will ensure energy security, independence and possibility to buy gas on the global markets where the lowest price is asked.

The state guarantee granted by the Seimas enables borrowing from the Nordic Investment Bank thus securing funding at the lowest costs. This decision is estimated to enable saving of approximately EUR 50 million on borrowing expenses by 2044, if compared to borrowing conditions offered by commercial banks.

With the state guarantee approved by the Seimas, starting from 2020 costs of Klaipėda LNG terminal operator will be decreasing by nearly EUR 27 million – from EUR 62 million down to EUR 36 million. Next year, the natural gas price for residents will be dropping by approximately 18 per cent on average, the impact of the above-mentioned decision on decrease of prices accounts for about 4 per cent.

This year was a record year for Klaipėda LNG terminal and the best year throughout the history of the terminal – approximately 18.5 TWh natural gas was handled through the terminal, the capacities of Klaipėda LNG terminal to import about 19 TWh natural gas in 2020 are already been booked.

With growing demand for LNG in transport, shipping, industry sectors, Klaipėda LNG terminal is among the most effective terminals in Europe. Klaipėda LNG terminal is the only terminal of this type in the Baltic States already used by Latvian and Estonian gas suppliers with ever-growing intensity. Gas pipeline connections laid in the region, ongoing processes of the merger of gas markets will open access to Klaipėda LNG terminal for Finnish, Polish, Ukrainian market players.

The gas pipeline link between Estonia and Finland – Balticconnector - will be put into operation from 1 January 2020. Opening of the Finnish gas market will make favourable impact on competitiveness and development of the whole region market. More intense commercial use of the capacities of Klaipėda LNG terminal will allow reducing the security component paid by Lithuanian natural gas consumers.

LNG plays an important role in the transit to climate-neutral economy by 2050. The European Commission considers LNG as the most cost-effective type of fuel during the transit period to green energy.  

The purpose of the Energy Union of the EU is to ensure that every state has three alternative sources of natural gas supply needed for energy security and competition. Lithuania will have three sources once the GIPL gas pipeline will be launched between Lithuania and Poland.

Following approval of the guarantee by the Seimas, the goal set in the plan of measures of the Government's programme in early 2017 is purposefully and consistently realised – decisions on long-term assurance of the operation of the LNG terminal and reduction of annual maintenance costs of the LNG terminal. In 2018, the Seimas approved the National strategy of energy independence and the Law on the liquefied natural gas terminal stipulate long-term operation of Klaipėda LNG terminal until the end of 2044.