Gas market in Lithuania

Main article: Lithuania

2022

50% reduction in gas consumption

Gas consumption in the bloc from August 2022 to January 2023 was 19% below the average for the previous five years, according to data released by Eurostat. Lithuania is in the lead.

Ban on gas imports from Russia

In June 2022, Lithuania officially banned the import of gas of the Russian Federation. The exception will be only the transit of blue fuel to Kaliningrad, according to the amendments to the law "On Natural Gas."

According to the new law, the country's gas transportation system and the Klaipedos nafta liquefied natural gas (LNG) terminal will be available only to suppliers from countries that do not pose a threat to Lithuanian national security, with the exception of suppliers who transport gas in transit to Kaliningrad.

Launch of GIPL gas pipeline to Poland

On May 1, 2022, the gas pipeline between Poland and Lithuania GIPL (Gas Interconnection Poland - Lithuania) began operation.

Lithuania is a member of the Three Seas Initiative, aimed at countering Russia.

As of June 2022

2020: Dependence on Russian gas

Зависимость ряда the European countries from Russian gas, 2019 and 2020 data

2015

LNG receiving terminal start-up

The natural liquefied gas terminal in the port of Klaipeda began its official commercial activities in 2014.

As of October 2015, the terminal has the only supplier - Statoil, which annually has to supply Lithuania with 0.54 billion natural gas, which is a fifth of all Lithuanian needs and can provide just over half of all domestic gas consumption in the country.

At the end of February 2015, Litgas signed an agreement under which LNG supplies from the American company Cheniere Energy can be organized in 2016. Negotiations are underway with other suppliers, Lithuanian Energy Minister Rokas Masiulis said.

have a good relationship with Cheniere... We are negotiating the first deliveries (next year). We would very much like to receive parties from USA to our region to compete with Gazprom, but the negotiations, of course, depend on price conditions, "Masyulis was quoted as saying Reuters during a visit to London.

In April 2015, US Secretary of Energy Ernest Monitz said that four export LNG terminals to the United States are in the process of construction and the first wave of supplies could ride until the end of 2015 or, at the latest, in early 2016. But after the delay of plans to lift the export ban, we are talking about the start of deliveries in mid-2016.

Lithuania's gas supply agreement with Gazprom ends at the end of 2015.

"I think that negotiations with Gazprom will now go on a competitive, reasonable and exclusively business basis. After we built the LNG terminal, there was no opportunity for blackmail. Because we believe there is no blackmail opportunity left, negotiations will be rational and related to the economy, not politics. This is a big step, "said^[1]

Deputy Director General of the Institute of National power Alexander Frolov considers the minister's words about blackmail "strange."

"The situation is this: LNG for such a small consumer cannot be cheap. Moreover, in principle, in such conditions it cannot be cheaper in annual terms than pipeline gas. Based on this fact, can Lithuania present LNG as a trump card in negotiations with Russia? It would be interesting to look at such negotiations, during which the buyer puts forward as a trump card his willingness to pay more for gas, "he notes

Lithuanian President Grybauskaite has long dubbed the construction of this LNG terminal "an achievement of the state" and is confident that from now on Lithuania has become an "energy-safe independent state."

However, the local population and business, unlike politicians, have an ambiguous attitude towards the LNG terminal. The energy-consuming business is concerned that the government will now force it to make a mandatory purchase of some of the gas at the terminal's "market" price, which is expected to be higher than Gazprom's "political" price.

Six months before the commissioning of the Independence floating terminal, Gazprom really reduced the price of gas for Lithuania by 20%, which the Lithuanian authorities immediately called the triumph of their energy policy.

After the commissioning of the LNG terminal, it turned out that the price of Norwegian liquefied gas is higher than not only the new, but also the old price of Russian gas from the pipe.

However, instead of cheaper Russian gas, the Lithuanian leadership forced energy suppliers to buy expensive Norwegian gas, obliging enterprises to take at least a quarter of the gas they needed from the LNG terminal.

At the same time, certain state and municipal enterprises in Lithuania are forced to buy 60% or more of gas from the LNG terminal.

For example, Vilniaus energija, which provides heat to the Lithuanian capital, was forced by the state to buy 65% of the gas it needs in Klaipeda without fail. As a result, heating prices for residents of Vilnius, which fell after the price of Russian gas decreased, began to rise again after the commissioning of the terminal.

And now Lithuania is discussing changes in the law "On the liquefied natural gas terminal," according to which all gas consumers, including the population, must pay for the maintenance of the terminal, the resource reports rubaltic.ru.

At the same time, the Ministry of Energy claims that if end consumers do not finance the maintenance of the LNG terminal, then only in Vilnius heating tariffs will soar by 20%. This is the result of the struggle of the country's leadership for "gaining energy independence" for ordinary Lithuanians.

Lithuanian Energy Minister Rokas Masiulis says that amendments to the law "On the LNG Terminal" are needed in order to distribute the costs of maintaining the terminal to a wider range of consumers and connect them with the power of a particular user: the more consumer power, the more he must pay for it.

In total, Lithuania consumes about 3 billion cubic meters. m per year. Nevertheless, it is noted that the volume of natural gas consumed in Lithuania has recently been rapidly declining, including due to high heating prices.

"Negotiations with an American company in this context are multiplication by zero. There are no LNG supplies to Europe from the United States and in the near future, given energy prices, one should not expect. The fact is that for the payback of American projects, LNG prices should be 2 times higher than now. That is, what we see now: a weak buyer is trying to negotiate with a weak seller, moreover, trying to knock out a favorable price for himself. The success of these negotiations will be as great as the overall success of the Lithuanian LNG terminal. None. Unfortunately, Lithuania, as a buyer, it is not very interesting, so large players do not offer it a favorable price. It turns out that it has no alternative to Gazprom, "Frolov said

Latvia refused to import gas from the LNG terminal of Lithuania

In 2015, Lithuania began supplying gas to Estonia, violating Gazprom's monopoly.

Even at the construction stage of the terminal in Klaipeda, Lithuania announced that it plans to export gas from the terminal to Latvia.

Nevertheless, earlier in 2015, Latvia's state-owned gas company, Latvijas Gaze, said it had no interest in buying LNG from the LNG terminal.

"Our demand for gas in Latvia is fully covered by a long-term contract with the Russian Gazprom. The market is not yet ready for additional gas volumes due to the current excess of gas, "said Mario Nullmeyer, Deputy Chairman of the Board of Latvijas Gaze

Gazprom owns 34% of the company's shares, so the Latvian company largely depends on the Russian holding.

The Lithuanian authorities hoped that Latvia would become one of the buyers of Lithuanian LNG and would receive gas from the regional LNG terminal. Instead, Latvia is currently choosing cooperation with Gazprom.

At the same time, analysts of the oil and gas industry have repeatedly noted that the capacity of the terminal in Klaipeda is 4 billion cubic meters. m - for one Lithuania is clearly redundant. That is why Lithuania needs to look for consumers who are ready to buy gas from the LNG terminal in Klaipeda so that this terminal can pay off.

Therefore, the state includes regulatory mechanisms, forcing large consumers to purchase a certain share of gas at the terminal.

Construction of a connecting gas pipeline with Poland

The European Commission, Poland and Lithuania signed an agreement on the provision of a grant for the construction of a local connecting gas pipeline, which will ensure the connection of the gas systems of the Baltic countries and Poland.

The solemn ceremony of signing the document took place at the residence of the European Commission in the presence of EC head Jean-Claude Juncker, European Commissioner for Climate Change and Power Miguel Arias Kanyete, Polish Prime Ministers Eva Kopach, Latvia Laimdota Strauyuma, Estonia Taavi Rõivas and Lithuanian President Dali Grybauskaite, who arrived in Brussels for the opening EU summit today.

"You have seen a breakthrough, a historic event that marks the connection of the Baltic energy system with the Western European energy system. This is not just a pipe connection - it is the end of the energy isolation of the Baltic countries, their dependence on one supplier. This is a step towards the free movement of energy resources in Europe, "said Jean-Claude Juncker

According to him, the European Commission "intends to invest about 300 million euros in this project."

The project will be implemented by the Polish operator of gas transmission systems Gaz-System S.A. and the Lithuanian operator Amber Grid. The estimated cost of the gas pipeline is 471 million euros.

The construction of the gas pipeline, which will run from the town of Zhirmunai near Vilnius to Warsaw, should begin in 2016. The design capacity will be 2.3 billion cubic meters. m of gas per year.

In fact, Lithuania has acknowledged the failure of its LNG terminal mega-project in Klaipeda and is looking for opportunities to get cheap gas from other sources.

The volume of gas production in Poland is small: this country has to buy up to 10 billion cubic meters from Gazprom. m of blue fuel. The situation in other EU countries is similar: its own production is small, a significant part of gas is imported.

Therefore, in fact, this means only that Lithuania will receive the same Russian gas, only from Poland.

See also

• Oil market in Lithuania
• Gas market in Ukraine

Notes