VILNIUS (AFP) – As much of Europe anxiously awaits a Ukraine-Russia deal to avert the risk of winter gas cuts, Lithuania is breathing a sigh of relief as its first liquefied natural gas (LNG) terminal will sever Moscow’s grip on gas deliveries to the Baltic states.
Aptly dubbed “Independence”, the massive floating LNG facility measuring three football fields in length is due to dock in the port of Klaipeda on October 27.
Its arrival comes just as Russian President Vladimir Putin warned that Europe faces “major transit risks” to gas supplies coming from Russia this winter unless Ukraine resolves a gas dispute with Moscow.
The terminal gives Lithuania the capability to import up to four billion cubic metres of gas per year from sources like Norway’s Statoil – well above the 2.7 billion cubic metres it bought from Russia last year.
That leaves plenty of extra capacity for its Baltic neighbours Latvia or Estonia, analysts note.
Despite joining the EU and NATO in 2004, Lithuania has been completely dependent upon Russia for natural gas, a legacy of five decades of Soviet domination that wound down in 1990.
The nation of three million will initially import 0.54 billion cubic metres of gas from Statoil in 2015, covering about one-fifth of its demand.
Tensions have been running high between Vilnius and Moscow for years over gas, as Lithuania believes that state-controlled Gazprom has abused its monopoly position and driven up the price.
Gazprom’s prices are confidential, but Energy Minister Rokas Masiulis told AFP that “Lithuania has paid the highest prices for natural gas in the EU in recent years”.
Vilnius has not taken the situation lying down. In addition to arranging for the LNG terminal, it has asked the EU to conduct an anti-trust probe against Gazprom and launched an international arbitration procedure, with decisions expected within the coming year.
Gazprom’s contract with Lithuania expires at the end of 2015.
While Gazprom is likely to remain a key supplier, Vilnius insists competition will improve pricing and energy security, and so curb Moscow’s political leverage in the region.
We’re “looking forward to important negotiations with LNG suppliers and Gazprom,” said Masiulis, adding that “in a worst-case scenario, we could buy all our gas via the terminal”.
As the arrival date neared for the new LNG facility, which Lithuania is leasing for a decade, Gazprom already agreed to a price cut of around 20 per cent.
Gazprom has always denied monopoly practises in Lithuania and warned that shipped-in LNG will not come cheap.
“If Lithuanian consumers are willing to pay more to reduce their dependence, it’s their business,” Gazprom spokesman Sergei Kupriyanov told AFP in Moscow.