Tender dispute risks delaying Lithuanian LNG terminal

By bne IntelliNews January 24, 2013

bne -

Lithuanian state-controlled energy terminal operator Klaipedos Nafta announced on January 23 that it has delayed a plan to approve a contractor to build a link to connect its planned liquified natural gas (LNG) terminal to the distribution grid pending a probe of the tender terms. The company suggests the issue could hold back the planned launch of the gas platform in late 2014.

The company was due to confirm the contract award to a consortium of Lithuanian firms at a shareholder meeting on January 25, but with a German bidder threatening legal action, it has been told to delay the move, it said.

"The company was obligated to suspend the procedure of conclusion of the contract for procurement until the Public Procurement Office gives an evaluation of the documents and decisions presented," the Klaipeda-based operator said in a statement on its website.

"The company will present the documents and decisions in connection with the procurement ... as fast as possible," it continued. Should the Public Procurement Office "evaluate them in the urgent manner," the statement continues, then the issue "should not have an impact on the timely implementation of the liquefied natural gas terminal project."

Klaipedos Nafta said on January 17 that it stands ready to fight a threatened lawsuit from PPS Pipeline Systems. The German contractor claims that the tender lacked transparency and should be re-run. A consortium of Lithuania's Kauno Dujotiekio Statyba and Siauliu Dujotiekio Statyba was announced as the winner of the tender on December 27, with with a bid of LTL138m.

The disputed tender is to build a 20-kilometre pipeline linking the floating LNG terminal to Lithuania's gas distribution network by October 1, 2014. The 2bn-3bn cubic metre per year regasification and storage facility is planned to go into operation by the end of next year.

The plan, which aims to break Lithuania's 100% reliance on imported Russian gas, hinges crucially on unbundling national gas company Lietuvos dujos, which currently controls both sales and the distribution network. Vilnius fought a long and bitter fight with fellow shareholders Gazprom and Germany's E.ON and secured agreement last year. The new Lithuanian government has exhibited a far less confrontational approach to Moscow, and said earlier this month that it plans to talk to Russia about the plan, although it maintains that it will carry it out.

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