Lithuania to benefit from changes on global LNG market

Lithuania to benefit from changes on global LNG market

Lithuania, which currently imports a small amount of LNG from Russia’s Gazprom via pipelines and only

from Norway’s Statoil via the Klaipeda LNG terminal, may expect new suppliers of liquefied natural gas,

for instnace, US energy company Cheniere Energy.

Energy expert Romas Svedas, a lecturer at the Vilnius University’s International Relations and Political

Science Institute, told BNS Lithuania that LNG prices from US should be competitive and pressure Statoil.

According to his calculations based on the US Henry Hub gas price indexes and costs of transportation to

Europe, US gas prices should be about 16-17 euros per MWh. The expert said the US gas price would be

competitive, as Statoil prices currently stand at 16-20 euros per MWh, while Russian gas costs 17-18

euros per MWh, according to data that is publicly available.

Dalius Misiunas, CEO of the energy holding Lietuvos Energija (Lithuanian Energy) that operates two

companies Litgas and Lietuvos Duju Tiekimas buying LNG from Statoil, says that the Norwegian gas

supplier has a geographic and logistic advantage, however, this does not mean that the two reasons will

ensure its status as the dominant LNG supplier to Lithuania. In his words, LNG from the United States

will have an effect on the market.

“The gas itself is cheap in the US and it can compete on the European market, regardless of the

additional technical costs,” the Lietuvos Energija CEO told BNS Lithuania.

Latvian energy expert Reinis Aboltins, consultant to the Latvian parliament’s European Affairs

Committee, believes there is a political component of the US gas exports to Europe in addition to the

economic one.

“It is important for the US to show their determination to supply LNG to US partners,” Aboltins told BNS.

Nevertheless, in his opinion, LNG from the Gulf of Mexico could be delivered at a competitive price, too,

speaking purely from the economic side.

The experts refused to predict specific changes of LNG prices, noting that they should remain attractive.

“It is a unanimous belief that the supply will be in surplus on the market in the next few years, and we

actually see this now – the proposed LNG prices are considerably lower than those we saw a few years

ago,” said Misiunas.

In his opinion, future prices “should not be higher than they are now.”

Aboltins said Europe was currently a market of buyers, not sellers with high prices. Therefore, if the

global situation remains unchanged in near future, gas prices may remain low.

Meanwhile, Svedas noted that the currently low gas price was due to cheap oil, however, the future

situation should change due to the emerging possibility to cut the link between gas and oil prices.

“We should focus on the basic things, such as the fact that the LNG has its market, the competition is

growing and when there’s a market and competition, things for consumers should be respectively

better. (…) It is my belief that the sector is promising,” said Svedas.

According to calculations, Lithuania will consume up to 2 billion cubic meters of gas this year, including

1.35 billion cubic meters of LNG supplied by Statoil and the rest by the sole gas supplier to Lithuania,

Russia’s Gazprom.

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