Lithuania Mulls More 'Liberty' LNG
US liquefied natural gas (LNG) is the right choice for Lithuania as it looks for a reliable supplier and energy partner, the energy secretary of the US Rick Perry told a transatlantic energy forum in Vilnius October 7, emphasising that American gas will become increasingly competitive.
And according to its energy minister, Zygimantas Vaiciunas, Lithuania is “ready” to hold negotiations on larger LNG imports via the Klaipeda LNG terminal.
So far there have been only two cargoes of US gas delivered to the Klaipeda LNG terminal (pictured), while Russia’s top private gas producer Novatek made three deliveries in August alone.
Lithuania's fertiliser manufacturer Achema mainly imports gas from Novatek. But Lietuvos Energijos Tiekimas (LET), part of Lithuania's state-controlled energy group Ignitis (formerly Lietuvos Energija) bought some from a trader, and Imlitex, which is part of the commodity trade group Imlitex Holdings, has also bought LNG from Novatek this year.
According to the US official, even if American gas is more expensive than Russian gas, the situation will change over time. "So the argument that the Russians make that somehow their gas is cheaper, it's probably a short-lived brag. Even if that's the truth today – and I'm not sure that's the truth today – so, the point is: gas going forward, US gas is going to be competitive with anybody in the world," he said.
In the energy secretary's words, the supply of US gas has already helped bring down LNG prices.
Vaiciunas noted that LNG is cheaper in the summer, but Lithuania is going to quite soon have a situation where LNG will be more cheaper than (Gazprom's) pipeline deliveries during the winter too. "That's how things stand in the market. And, naturally, we are going to have almost more LNG than pipeline gas in the near term," he added.
"We've been observing record LNG exports from the US this year, and also unprecedented LNG import volumes via the Klaipeda terminal, and the two things are connected as the quadrupled US LNG exports have very positive impact on global gas prices," Vaiciunas said, while admitting that comparatively low volumes of gas have arrived from the US so far.
Perry also warned that the NordStream 2 gas pipeline being laid on the seabed of the Baltic Sea would increase Russia's influence on Europe's foreign policy. In his words, NordStream and TurkStream, the gas pipelines set to connect Russia with Germany and Turkey, "would enable Moscow to end gas transit through Ukraine by the close of the decade."
Perry has called US LNG 'liberty LNG' on the basis that it has freed eastern Europe from Russian gas; and this desire to end dependence on Russia explains Poland's government's string of US LNG and Norwegian pipeline gas purchase agreements. But traders and end-users have tended to buy what is cheapest, which has been pipeline gas or LNG from Russia.
Energy ministers from other countries in the region also attended the forum.