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Baltic States Agree On Single LNG Import Terminal 16.02.2011 + + + BMI View (Business Monitor International): Although a pipeline from Poland's proposed LNG import terminal remains a low-cost alternative, political agreement on a single LNG import terminal for the Baltic states augurs well for regional gas cooperation. It appears that the three Baltic states of Lithuania, Latvia and Estonia have agreed to build a single common liquefied natural gas (LNG) import terminal after several years of pushing competing LNG projects. The prime ministers of the three countries said on February 11 2011 that they would seek European Union (EU) funding for a single LNG import terminal. The impetus for the various proposed LNG terminals was a desire to loosen Russia's grip on the Baltic states' gas markets. All three countries depend entirely on natural gas imports from Russia via the Yamal Europe pipeline. Furthermore, Russia's gas export monopoly Gazprom owns significant minority stakes in the national gas companies of Estonia (37%), Latvia (34%) and Lithuania (34%). In 2010, both Lithuania and Estonia kick-started plans to break the monopoly of their national gas companies. The moves, which were in line with EU energy competition directives, were widely seen as attempts to loosen Gazprom's control of local energy markets. Although the three states have apparently now set out a common position, the statement comes just a day after Lithuania's president said that his country would not object to a Latvian LNG project, but that Lithuania would go ahead regardless with its own planned LNG terminal. The two countries have feuded over Lithuania's claims that a Latvian project would be built by a Gazprom subsidiary, and would also include liquefaction facilities, thus theoretically creating additional Baltic gas export capacity for Gazprom. Of the three states, Lithuania had the most developed LNG project proposal. In 2008, Vilnius received funds from the US for a feasibility study regarding a 1.5-2.0bn cubic metre (bcm) LNG import facility. In 2010, the country claimed that it was ready to build a EUR200mn re-gasification terminal on Kiaulés Nugara Island, near the port of Klaipeda, and that Latvia and Estonia were welcome to acquire shares in the project. Vilnius also claimed that any absence of EU funds would not hamper the project, as Oman had expressed an interest in investing in the LNG facility. As the Lithuanian plan is currently the most advanced, it is possible that this would become the joint LNG import terminal agreed upon by the three states on February 11. However, Latvia has a history of supplying gas to both Lithuania and Estonia, thereby making it unclear which country will accommodate the proposed LNG terminal. Lithuania has also been pushing the so-called Amber project, which would allow for pipeline gas imports from Poland's Swinoujscie LNG terminal, which is due onstream in 2015. As Poland and the Baltic states share a desire to reduce dependence on Russian gas, this is a feasible low-cost alternative to a new LNG terminal. However, a single LNG import project is certainly more likely than the pipedream of two or three rival projects for a relatively small gas consumer base. Copyright 2011 Business Monitor International Ltd. BMI Emerging Europe Oil and Gas Insights Published by PennEnergy (PennWell Group) |
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