Lithuania Seeking to Renegotiate LNG Supply Contract with Statoil

Lithuania is seeking to renegotiate a liquefied natural gas (LNGLF) (LNG) contract with Norway's Statoil due to falling demand, head of energy group Lietuvos Energija said on Tuesday.

 

"The government has asked us renegotiate the contract... One question is the total annual volumes, which could be smaller," Dalius Misiunas, chief executive of state-owned Lietuvos Energija, told Reuters, declining to elaborate.

 

Misiunas said he wanted to negotiate results by the end of this year, when Lithuania's long-term gas supply contract with Russian gas supplier Gazprom expires.

 

Gazprom has said it will offer to sell some gas for the Baltic state at an auction planned for December, and Misiunas said Lietuvos Energija was interested to take part, but there few details available so far.

 

"Norwegian gas today is more expensive than Russian (pipeline) gas," Misiunas said, speaking on a sidelines of an energy conference.

 

Lietuvos Energija subsidiary Litgas signed a five-year deal in 2014 to import 540 million cubic metres of gas from Norway via a floating LNG import terminal in Klaipeda.

 

Warm weather and increased used of biomass instead of gas for central heating has left Lithuania with surplus gas, prompting a search for markets elsewhere.

 

Lithuania has been also negotiating LNG imports from the United States and Reuters sources said the Baltic states could get the first U.S. LNG cargo expected in February.

 

Misiunas declined to elaborate on progress, but said it would depend on the gas price.

 

"It should not be a political decision (to buy U.S. LNG), but maybe the seller would treat it as a market entry (price)," Misiunas said.

 

The country's parliament on Nov. 17 approved amendments to allow the re-selling of LNG on international markets.

 

Litgas has previously said it planned to supply 280 million cubic metres of gas out of all its contracted volumes to Lithuania's regulated heat and electricity producers next year, and will sell the rest in the domestic or international market.

 

Lithuania started exporting gas to Estonia in January, but attempts to do so to neighbouring Latvia were met by opposition from local gas utility Latvija Gaze, 34 percent owned by Russia's Gazprom.