KN (AB “Klaipėdos nafta”) – the operator of oil products and liquefied natural gas (LNG), terminals is further enhancing its attention to the international LNG activities. This week, KN CEO Mindaugas Jusius was visiting the United States of America, where he had meetings with major companies in the LNG sector aimed at discussing future partnership and development prospects.
 
KN CEO Mindaugas Jusius met the representatives of the American LNG supplier “Freeport LNG”, developers of various LNG projects “Cheniere” and “NextDecade” and the LNG operator “Commonwealth LNG”. Also, meetings with LNG trading companies “Total” and BP took place.
 
“We have a great deal of unused potential to develop our cooperation with the USA and its energy companies. Our experience and competence are evaluated at the international level. We believe that the partnership and established contacts with US companies in the LNG sector will enhance our positions while developing the LNG import projects of terminals,” said Mindaugas Jusius, CEO of KN.
 
The head of KN also emphasised that the USA is planning to enhance the supply of LNG to Europe and also to offer new opportunities for the LNG terminal in Lithuania. “Our aim is to increase the efficiency of the use of the LNG terminal in Klaipėda. The establishment of cooperation and the use of our infrastructure for the LNG import from the USA could help us enhance the added value for Lithuania and the whole Baltic Sea Region. This would undoubtedly contribute to the reduction of the terminal costs for residents and business in Lithuania,” the CEO of KN noted.
 
Mindaugas Jusius also noted that the possibility to import LNG will become more significant after the projects of gas interconnections are accomplished. It is expected that the project of gas interconnection between Estonia and Finland will be accomplished in 2020, and the project of gas interconnection between Poland and Lithuania will be accomplished in 2021.
 
In April, KN and “Freeport LNG”, a US supplier of LNG and the operator of the future LNG terminal, signed a mutual memorandum on further cooperation in design and development of the terrestrial infrastructure for floating LNG terminals.
 

Žana Kraučenkienė, a widely experienced risk manager, has joined the Audit Committee of KN (AB “Klaipėdos nafta”), an oil and liquefied natural gas (LNG) terminal operator. KN Audit Committee operates as an advisory body of the Supervisory Council of the company in the fields of internal control and operational risks management.
 
Žana Kraučenkienė holds a certificate of internal audit, certificate of training of professional board members and is certified risk management professional. Her work experience covers the fields of internal audit, risk management, internal control, improvement of process efficiency and other fields. The new member of KN Audit Committee takes active participation in public activities. She is a member of the Risk Management Committee of the Actuarial Association of Europe, and of the Institute of Internal Auditors, she participates in activities of the boards of the Lithuanian Actuarial Society, the Association of Risk Management Professionals. At present Žana Kraučenkienė is heading the company “Effectum LT”, and also acts as the head of the Internal Audit Department of the Lithuanian Children and Youth Centre.
 
Apart from Žana Kraučenkienė, the Audit Committee of KN also consists from Laura Garbenčiūtė-Bakienė and Andrius Varanavičius, who were appointed as members of the committee on 21 August 2018.

The main objective of the Audit Committee is to enhance the efficiency of the operation of the Supervisory Council in the field of financial supervision, and to help ensure that decisions are taken impartially and after proper consideration. The Audit Committee supervises the drafting of the company’s financial reports and auditing procedures, ensures that the company adheres to the principles of independence and objectivity of audit companies, supervises the systems of the company’s internal control, risk management and internal audit, as well as the efficiency of the operational processes.

Members of the Audit Committee are appointed until the end of the office of the Supervisory Council of the operating company. The current Supervisory Council of KN was appointed on 27 April 2018 for the period of four years.
 

Oil and liquefied natural gas (LNG) terminal operator KN (AB Klaipėdos Nafta) will be focusing more on international LNG activities and initiating related changes in its organisational structure. As of 1 December, the company’s LNG Business Service is being replaced by the LNG Business Development Service and the Klaipėda LNG Service.
 
The changes in the organisational structure reflect the company’s business strategy and increased focus of international LNG project development activities.
 
The functions of the LNG Business Service currently in place include both areas: the development of international activities and effective management of the Klaipėda LNG Terminal. In the course of the transformation of the company’s activities, it was decided to divide this service into two, thus focusing on more effective development of each area of business.

“This is a natural step by which we are emphasising that KN’s activities have considerably grown and transformed – we are not only taking care of the entire LNG service value chain in the Baltic region, but also actively striving to establish ourselves in international markets. The main axis of activities of the LNG Business Development Service is one of KN’s strategic priorities: international LNG projects, which open broad opportunities for KN to establish itself as a world-class LNG player. Meanwhile, the Klaipėda LNG Service will be in charge of cost reduction at the Klaipėda terminal, export to third countries, bunkering and other related issues. Our goal is to make the best use of all of the options the Klaipėda terminal has to offer in the region,” says KN CEO Mindaugas Jusius.

The LNG Business Development Service will be headed by Tadas Matulionis, who is currently the LNG Business Director, and a vacancy has been announced for the position of director of the new Klaipėda LNG Service.
 
 

Benefits brought by the liquefied natural gas (LNG) terminal, which in four years managed to save Lithuanian population's incomes by EUR 103 million due to lower gas prices, were already noticed by many residents of the country, especially when gas prices in Lithuania are among the lowest in Europe at the moment. Smaller terminal would make the gas more expensive because its servicing would be more complicated. That is the truth; however a myth that the present terminal is too big is spreading in public space. And there is more than one myth – about terminal maintenance, transfer into private hands, impact on decrease of gas prices. So, what are the true facts? 



1^st myth: LNG terminal is too big for Lithuania         
The capacity of the LNG terminal is 170 thousand m³. Now, gas carriers of global standard of capacity of 130 – 150 thousand m³ gas bring gas to it. If it was decided to replace the storage vessel with a smaller terminal, e.g. of 50 thousand m3 storage capacity, several problems would arise, which are discussed in the information video from the series called #energyfreedom (Lithuanian language): https://www.youtube.com/watch?v=_-rDBhRAw50
'Smaller terminal would not be able to accept big gas carriers of global standard. Therefore, small gas carriers would have to bring gas, but it means a bigger number of carriers resulting in a rise of reloading cost. It would inevitably increase gas price. Besides, a smaller terminal would not manage to cope with a crisis in winter season – with increased demand for gas, such terminal would not be able to secure necessary quantity of gas', explained Mindaugas Jusius, CEO of KN.

2^nd myth: LNG terminal maintenance is too costly
Residents have to contribute to the LNG terminal maintenance – security component is included into gas price. Nevertheless, having calculated the decrease of gas price after launching the terminal, it is evident that residents pay less because of the terminal.  
Price of 1 cubic meter for domestics consumers using gas for cooking in the period from the 1st half of 2014, when the terminal was not in operation yet, until now dropped down by 18 Eurocents. Security component in gas price amounts to 3 Eurocents. Thus, residents save six times more than pay for security.
Gas price for residents using gas for cooking and heating decreased by 15 Eurocents during the same period mentioned above. The security component in gas price for them amounts to 5 Eurocents, thus they save 3 times more than pay for security. 
Following drop in prices of gas import into Lithuania, big gas consumers also enjoy benefits – the average price of gas import into Lithuania decreased by 31 per cent in the period of four years. This way, organisations are able to make flexible decisions whether to buy gas through the terminal or pipeline from Gazprom.

3^rd myth: natural gas may not be needed in the future
International Energy Agency forecasts growth of gas import into Europe in the nearest two decades rather than decrease. If comparing year 2016 (305 billion m³ imported gas) with 2040 (395 billion m³), it should increase by 23 per cent.                       
Gas will be needed in our country as well, besides, Lithuania can make money from it in foreign markets. 'At present, Lithuania mainly imports electricity, but in the future, with electricity demand further increasing, it will have to be generated in Lithuania, as well. And the most cost-effective scenario will be generation from gas. The role of gas, facing rise in biofuel prices, can increase also in heating sector. Sea and road transport is increasingly shifting towards liquefied natural gas. Furthermore, when the link with Poland will be launched, Lithuania could export gas to Central Europe', said Mr. Jusius.

4^th myth: the terminal should be in private hands
Should the terminal be transferred into private hands and lose state guarantees, the dominating supplier could dump gas prices for a year or two , i.e. could cut them down so much that buying gas from him only would be cost-effective. According to Mr. Jusius, in such event the LNG terminal would turn into an unnecessary burden to the owner of the terminal.  
'The terminal would most probably go bankrupt or would be cheaply sold by the owner. The, the dominating supplier could increase prices. According to the calculations of Pöyry Management Consulting, the price of imported gas could increase by 11–20 per cent if the terminal was rejected.  While Lithuania would no longer have an alternative and would be forced to buy gas from the dominating supplier for his asking price', explained CEO of KN.  

5^th myth: gas price in Lithuania dropped down because of its global drop in 2014 
If drop in gas price in Lithuania was determined merely by global tendencies, the change in prices had to be similar everywhere, but that is not the case.
The average gas price on the British NBP exchange decreased by 15 per cent in the period of four years –  from 24.07 EUR/MWh (1st half of 2014) down to 20.49 EUR/MWh (1st half of 2018).      
While the average price of gas import into Lithuania dropped down twice more than on the NBP exchange – by as many as 31 per cent:  from 29.84 EUR/MWh (1st half of 2014) down to 20.60 EUR/MWh (1st half of 2018).
'The fact that the gas prices in Lithuania decreased two times more than in Western Europe proves that it is not the consequence of global price drop only. It is the result of the operation of the LNG terminal as well', said Mr. Jusius, CEO of KN.