Friday 22 August 2014

Lithuania to get gas from Norway

Liquefied natural gas (LNG) will be shipped to Lithuania from Norway after a five year deal between its energy company LITGAS Norwergian firm Statoil.

LITGAS officials said the deal marks a new natural gas pricing policy for the country, linking to the natural gas price movements on the international markets.

Starting in 2015 Statoil will supply an 540 million cubic meters of natural gas per year, or around 950 thousand cubic meters of LNG.

The price of LNG supplied to Lithuania will be linked to the value of the NBP index, the UK’s natural gas exchange, according to LITGAS.

Dominykas Tučkus, General Manager of the gas supplier said: “This type of pricing is new to Lithuania and this means that the price of natural gas supplied by LITGAS will depend on changes in the supply and demand for natural gas, including LNG on the international markets as well as seasonal temperature fluctuations.”

This means they can “abandon” linking gas prices to oil prices, a practice which “dominates in Eastern Europe and often results in natural gas prices that have no relation to the ones prevailing in the rest of Europe,” he added.

Geir Heitmann, vice president of Statoil LNG Trading and Operations said the contract marks the firm's "first step" with LNG business in the Baltic Sea region.