After the thorough technical examination and maintenance works of the of the floating storage and regasification unit (FSRU), which lasted a bit longer than one month, Klaipėda LNG terminal is operating most intensively since the beginning of the year. The interest of the market participants in the services of the terminal is fuelled by favourable prices of natural gas emerging in the LNG markets.

The TTF index of the Western European natural gas exchange has decreased by almost a half since October last year – the prices have decreased by EUR 12/MWh and they now amount to EUR 15.77/MWh. The summer and autumn prices observed in the market of future contracts are even lower, i.e. about EUR 14/MWh, i.e. by 36% lower than the prices observed within the same period of 2018.

The competitive prices of the gas supplied from international LNG markets is determined by the fact that all LNG terminals of Western Europe work in a manner more intensive than they worked lasted year. During the first quarter, the total amount of gas they supplied reached 24 billion m3, i.e. by 23 times more than the amount supplied within the same period last year. The regasified LNG entering the market suppresses the local production and the gas imported via remote long-distance pipelines, therefore, the prices of natural gas in wholesale markets drop extremely fast, and importers having access to a great number of sources use the emerging opportunities.

The European tendencies can also be observed in the activities of Klaipėda LNG terminal. However, in February and March, the pre-planned technical checks and maintenance works were performed in the terminal. The inspections of the LNG storage vessel together with the regasification device (FSRU) corpus, equipment and storage facilities must be performed every five years as per the requirements of the DNV GL vessel class and the vessel registration state. These were the first technical maintenance works of Independence of such a scope, and they were performed in order to ensure that the inspection of the vessel is performed in Klaipėda to make it shorter. There were no serious defects identified during the technical inspection, and the inspections was performed without deviating from the plan of the scheduled works.

“After the accomplishment of the planned long-term inspection, the Klaipėda terminal renewed its activities in late March and now it is operating with huge capacity. All the terminal users have increased the amount of the capacities they order. Only in April and May we are planning to accept eight LNG cargoes delivered with ordinary and small-scale gas carriers,” claims Mindaugas Jusius, CEO of KN (AB “Klaipėdos nafta”) – the operator of oil products and liquefied natural gas terminals.

The small-scale LNG carrier Coral Anthelia which will arrive to Klaipėda in the nearest future, marks the new stage in the history of the terminal operation. So far, small-scale LNG reloading operations were focused on the export: LNG was reloaded from the terminal into small-scale LNG gas carriers, which transported the gas to small-scale LNG import terminals in Sweden, Finland and Norway.  This time the LNG reloading operations will be performed from a small-scale LNG gas carrier into the storage vessel Independence.

In April, the terminal will accept one large-scale and three small-scale LNG gas carriers, which will bring the total of 158 thousand m3 of LNG. In May-June, four more small-scale LNG gas carriers, each of which will carry 10 thousand m3 of LNG, and two large-scale gas carriers with 138 thousand m3 of LNG each, will enter the terminal. The small-scale LNG gas carriers will be accepted between the large-scale LNG convention cargo.
 
“Seeking to provide the services of natural gas regasification and reloading meeting the highest security standards, we, together with the owner of FSRU Independence – “Hoegh LNG”, are using the innovations which enable our clients to use various possibilities emerging in the market.  We not only reload the LNG into small-scale gas carriers, but, when a favourable situation emerges, accept the gas brought to Klaipėda terminal by smaller gas carriers,” Mr. Jusius.

According to him, the competitive pressure, which the globally traded LNG provides, is very important for final gas user in our region: We see that with the markets maturing suppliers use all the possibilities to provide gas for as lower prices as possible, and we, as the operators of the infrastructure, put every possible effort to provide quality services under favourable conditions and to flexibly respond to clients’ needs when adjusting schedules and finding necessary technological solutions”.

The difference between the prices of the coming summer season and winter in the markets of future agreements is more than EUR 5/MWh, and this provides grounds to believe that the number of the LNG flows in Klaipėda will grow in the future.
 

The Board of KN (AB “Klaipėda nafta”), the operator of oil products and liquefied natural gas (LNG) terminals, has offered to pay to the shareholders the dividends amounting to EUR 11.6 million, i.e. the total profit of 2018 or a bit more than EUR 0.03 per one share. This decision the Board of the company adopted with regard to the operation results KN achieved in 2018.
 
The dividend policy of the company specifies that the company’s Board establishes the yearly amount of the dividends with regard to the amount of the net profit, financial indicators, the company’s financial liabilities and the strategy implementation. According to the audited financial statements, in 2018, the revenues of KN amounted to EUR 100 million. In the reporting period, the company’s EBITDA amounted to EUR 26.9 million.
 
“The year of 2018 was full of challenges. However, despite the tension between the neighbouring states in the sector of oil and oil products logistics, we were successful in preserving stable cargo flows. We also launched the works of the second stage of Klaipėda oil terminal development, preserved stable sales volumes in foreign markets and exceeded the planned profit level. Having regard to the financial results of the Company and seeking higher operational efficiency, the Board of KN offers to distribute the profit earned throughout 2018 by paying dividends and thus ensuring the highest return to the shareholders,” says Mindaugas Jusius, KN Chief Executive.
 
Last year, KN allocated EUR 13.2 million for investments. This year, the company is planning to further invest into the enhancement of the competitiveness of Klaipėda oil terminal. The company will also start its preparation for the implementation of the decision regarding the assurance of the long-term LNG import delegated to it by the state and for additional financial liabilities. The company has sufficient reserves for the planned investments and the implementation of the financial liabilities.

With regard to the amount the company allocated for the dividends, it will supply the state budget with EUR 8.4 million. Last year, KN also paid to its shareholders 100% of the profit earned in 2017 in dividends. It is estimated that the total amount KN paid to the state in dividends within the last four years will amount to EUR 29 million. In 2018, KN was also among the five major national tax payers, who supplied the state budget with more than EUR 175 million in various taxes.
 
The offer of the Board of KN must be approved by the shareholders of the Company at the general shareholders’ meeting, which will take place on 26 April 2019.
 
Currently, the following persons are the members of the Board: Mantas Bartuška, Dainius Bražiūnas and independent board members Giedrius Dusevičius, Bjarke Pallson and Ian Bradshaw.
 
72% of the company’s shares belong to the state.
  
 

The Arctic Princess liquefied natural gas (LNG) carrier that arrived at the Port of Klaipėda on Wednesday marks the end of technical inspection and maintenance of the floating storage and regasification unit (FSRU) that began in late February. Carried out by LNG and oil terminal operator Klaipėdos Nafta (KN) together with Höegh LNG, the owner of the FSRU Independence, the inspection went successfully and no major defects were found.

The Arctic Princess, which delivered LNG from Norway, will begin cooling the four tanks on the FSRU Independence back to the regular temperature of -160°C. When the technical inspection and maintenance work began for the first time since the terminal began operations, the tanks were warmed up so that specialists could assess their condition.

During the thorough inspection of the hull, the LNG tanks, and all of the regasification equipment that took slightly over a month, no serious defects were found and the work was carried out according to schedule.

“We are happy with the professionalism and efficient, high quality work carried out by KN and Höegh LNG specialists with several dozen Lithuanian and foreign contractors. Now that we have completed technical maintenance, we are fully prepared to continue providing natural gas regasification and reloading services that meet the highest safety standards and fulfil the obligations to LNG terminal customers in a professional manner,” said KN CEO Mindaugas Jusius.

Business continuity of the LNG terminal is being ensured by the Arctic Princess LNG carrier, which arrived at the Port of Klaipėda today with 138,000 m3 of LNG. This is the 49th LNG import since the Klaipėda LNG terminal began operations. It is planned that by the end of the 2019 gas year (October 2019), five other large LNG carriers will stop by the Port of Klaipėda, delivering a total of 690,000 m3 of LNG. 

Inspection of the hull, equipment and tanks of the FSRU is mandatory every five years in accordance with the requirements of the DNV GL class granted to the vessel and the country of registration. This is the first time that technical maintenance of such scope was carried out on the Independence, and since there is still no established global practice for inspecting FSRUs afloat, the experience gained by the specialists in Klaipėda will serve as guidelines for controlling authorities in carrying out similar FSRU inspections in other parts of the world. 

In order to effectively manage activities, LNG terminal customers were informed about the scheduled work six months in advance, and this was taken into account when planning the schedule for the 2019 gas year.
 

A general inspection was carried out at KN (AB “Klaipėdos nafta”) Subačius oil terminal at the end of February. The terminal is used to store Lithuania’s oil product (fuel) reserves. No environmental violations were detected during the inspection.

According to the Environmental Protection Department under the Ministry of Environment, it is acknowledged that the Company operates in accordance with legislation and requirements governing environmental protection, fire safety, occupational safety and health. The Company also regularly monitors the possible impact of its activity on ambient air quality.  

Moreover, oil product tanks and pipes undergo regular maintenance and their anticorrosive protective lining is repaired if necessary. To reduce the pollution of ambient air with volatile organic compounds, tanks used for the storage of petrol are equipped with internal floating roofs which reduce the emissions of volatile organic compounds by at least 95%.

Taking into account large amounts of oil products stored at the Subačius oil terminal and the potential environment threat, inspectors carry out on-the-spot checks every year.  It should be noted that there have been no environmental violations at the Subačius oil terminal for more than ten years.