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.

Related Articles

ECB to seek clarity on Rimsevics' role as Latvian central banker remains mired in scandal

The European Central Bank (ECB) President Mario Draghi said on March 8 that the Eurozone’s central bank will seek clarity on what role the Latvian central bank governor Ilmars Rimsevics has ... more

Estonia to probe Danske Bank over money laundering allegations

Estonia's financial regulator will investigate Danske Bank over allegations made by the Danish and UK media that the bank’s branch in Estonia was involved in money laundering, the regulator ... more

Latvia in shock after third-largest lender ABLV folds in aftermath of money laundering allegations

The Latvian authorities will meet on February 26 to discuss dangers that may ensue from the failure of the country’s third-largest bank ABLV, the Baltic state’s prime minister said on February ... more