Lithuania announces second deal to supply LNG to Estonia

By bne IntelliNews January 28, 2015

Lithuanian gas supply and trading company Litgas has signed a second deal in as many days to supply gas to Estonia, it announced on January 28.

The new contract is part of Lithuania's strategy to build a regional market for its new liquefied natural gas (LNG) terminal. The latest deal will see Litgas launch deliveries to Estonia’s Eesti Energia from March 1, it reported in a statement. The volume and the value of the contract were not disclosed.

Lithuania started operations at its floating LNG platform in December after a vicious fight to free its pipelines from the control of Gazprom. The facility provides the first non-Russian gas supplies to the Baltic States.

Litgas, which announced its first regional supply deal - with Estonian distributor Reola Gaas - on January 27, has a contract with Norway's Statoil to import 0.5bn cubic meters per year. It says it hopes to send 30mn cm to Estonia in 2015, including the undisclosed volumes under the two announced deals.

Estonia freed its gas grid late last year and has already imported a test volume of gas from the Lithuania’s LNG terminal. However, Latvia's pipelines link the two countries, and Riga has said it does not plan to break Gazprom's control of its network until 2017. Still, there seems to have not been any objection from Latvia to Litgas’ assertions that it going to use Latvian infrastructure to sell gas to its Estonian clients.

“Test supplies confirmed that it is possible to trade gas via alternative importers and that this system is working,” said Heikko Mae, the head of Eesti Energia energy trade department. “Given today’s regulations and the tense political situation, additional gas suppliers are undoubtedly important for ensuring the security of gas supplies."

The regional gas market - cut off from European pipeline networks by its Soviet history - could be in for further transformation, with more LNG terminals planned over the next few years. After years of squabbling over the location of an EU-backed pan-regional LNG facility, Reola Gaas parent Alexela has now agreed a plan with Finland's Gasum. Gazprom, meanwhile, has recently announced a plan for its own LNG facility in the Baltic port of Ust-Luga.

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