Statoil to Supply Small Baltic Terminals with LNG

Statoil is to supply LNG to small capacity LNG terminals in the Baltic Sea through Lithuania's Klaipeda LNG terminal, a Statoil official said on Thursday, after the Norwegian company signed an LNG deal with subsidiaries of Lithuanian state-owned energy group Lietuvos Energija.

The floating LNG terminal at Klaipeda started operations in 2014 with the arrival of the FSRU Independence as part of Lithuania's efforts to reduce dependency on Russian gas. Independence was built by Hyundai Heavy Industries and is leased from Höegh LNG.

The operation has struggled to attract business because Latvia and Estonia are not buying its gas. Statoil is so far the only supplier to the terminal.

Ingvar Skogseide, Statoil's head of LNG operations said: "If I'm sitting here in five years and this is a success story, I hope that we are churning three to five conventional (LNG) cargos annually into this market."

Gazprom was previously the only supplier to Lithuania, but this year Statoil will supply more than the Russian company.

Statoil's deal with Litgas and Lietuvos Duju Tiekimas, the trading subsidiaries of Lietuvos Energija, will use the subsidiaries' existing operations at the Klaipeda terminal to balance out any shortfalls or surpluses when Statoil's conventional and small-scale LNG tankers are loading.

Conventional LNG tankers carry about 140,000 cubic meters of LNG in liquefied form. Small-scale tankers carrying less than a tenth of that are used to supply small LNG terminals which cannot accept the bigger conventional tankers.

Statoil postponed an earlier plan to start an LNG marine fuel business in the Baltic region after falling oil prices dragged down prices for competing fuel.

"We think that one way or the other, LNG as a marine fuel will force itself ahead, either through price mechanisms or through environmental legislation that we see coming more and more," he told reporters.

The Klaipeda terminal expects to accept 14 LNG tankers in the year to October 1. This will mean that about 2.67 billion cubic meters of the terminal's four billion cubic meter import capacity is unused, according to the terminal's operator, Klaipedos Nafta.