KN (AB Klaipėdos nafta), operator of oil and liquefied natural gas (LNG) terminals, is implementing the project on ensuring the long-term operation of the LNG terminal in Lithuania and announces the public procurement of a FSRU (floating storage and regasification unit). Offers from potential suppliers will be compared to the redemption (option) value of the FSRU ‘Independence’, selecting the most economically advantageous offer, as required by the Law of LNG Terminal. 
 
The procurement results will show whether there are any better alternatives on the market than the option of the acquisition of ‘Independence’ as it is provided in the FSRU lease, operations and maintenance agreement with Norwegian company Hӧegh LNG signed in 2012. This agreement expires at the end of 2024. By December 2022, Lithuania has to decide on the acquisition of the FSRU.
 
“For Lithuania LNG terminal is one of the success stories of energy security and strengthening of the independence of the state. Thanks to it, today we have secured alternative natural gas supply, price competitiveness and we can choose from where and under what conditions we will buy natural gas. Our goal remains to ensure efficient operation of the terminal and the best price for consumers. The terminal, as an important component of the regional natural gas market, will become even more important when the gas pipeline between Lithuania and Poland becomes operational, joining the continental natural gas network,” says Minister of Energy Dainius Kreivys. 
 
With the implementation of respective decisions, the KN share of the security supplement has already decreased from EUR 361.84 Eur for MWh per day per year (2017) to EUR 151.38 for MWh per day per year (2021).
 
Prior the tender for the acquisition of the FSRU, KN has engaged external experts, i. e. three foreign companies providing legal, commercial and technical consulting services selected through public procurement procedure, which have carried out an LNG market research and public market  consultation. During this procedure, market participants, i.e. potential FSRU suppliers, were presented with draft public procurement documents and technical specification. Market participants and other stakeholders could provide their comments and suggestions for these documents. This process was initiated by the tender organiser in order to prepare for the procurement with maximum quality and allow the market participants to familiarise themselves with the preliminary subject-matter of the procurement. In course of these stages, the perspective of LNG and the expectations of the LNG terminal users were assessed, essential technical conditions were determined as well as the FSRU parameters and supplier qualification requirements were defined.
 
From a formal aspect, to fulfil the statutory obligation to select the most economically advantageous tender, the performed market consultation, market research and data collected thereby is sufficient for selecting the FSRU supplier. The public procurement procedure is the FSRU selection method preferred by the company. The objective of this process is to provide the most favourable conditions for all market players to participate in the FSRU selection process and to propose their solutions. Applications are expected within one month of the start of the tender.
                                            
‘We announce public procurement in order to achieve maximum openness and transparency of the FSRU selection procedure, thus we urge market participants to submit their tenders for the acquisition of FSRU.  Tender ranking model was created with special diligence, by engaging competent external experts. Even though the price of the FSRU is an important criterion in the selection process, the final decision will also depend on other important components: age and size of the suggested vessel, regasification capacity, expected operational costs, as well as certain technical solutions. In other words, the company will evaluate not only the price, but also the FSRU life cycle costs, technological and market compliance, thus ensuring the criterion of economic efficiency and validity of the future selection’, emphasizes Darius Šilenskis, the CEO of KN.
 
According to D. Šilenskis, after the extensive FSRU and natural gas market research, discussions with current and potential users of the LNG terminal, as well as during the formal pre-procurement consultation, it became once again clear that the demand for LNG and such infrastructure required for the import thereof would remain both in Lithuania and in the region.
                                  
‘Orientation capacity of the FSRU should be at least 150 thousand cub. m (in comparison, current FSRU capacity is 170 thousand cub. m). Users of the LNG terminal expect other parameters of the FSRU to be at least equivalent to those of the current FSRU ‘Independence’. Both the comments provided by the users of the terminal and the global FSRU market trends were taken into account while formulating the requirements for the future FSRU. However, it is also important to understand that the range of the FSRU suppliers is rather narrow and the market considered as niche due to high and specific requirements for technology, its flexibility, efficiency and reliability, thus the number of possible alternative offers on the market may be sufficiently limited’, says the head of KN.  
 
The public procurement of the FSRU is a part of the project on ensuring the long-term operation of the Klaipėda LNG terminal, which started three years ago. Prior to the announcement of public procurement, KN has implemented several stages of ensuring long-term operation of LNG, among which one of the most important is decreasing the security supplement, included to the natural gas price and paid by natural gas consumers.
 
More on the project ensuring the long-term operation of LNG terminal: KN - Knowledge driven
 

KN (AB Klaipėdos Nafta), the operator of oil and liquefied natural gas (LNG) terminals, has completed the annual procedure of allocating LNG terminal capacity for the new gas year. Customers, including the Norwegian energy company Equinor ASA, will use the pre-ordered 8.9 TWh LNG terminal regasification capacity during the gas year starting on October 1, 2021.

Last year, 8.4 TWh was distributed during the annual capacity allocation procedure, and additional 12.3 TWh of natural gas was ordered during gas year.

‘This year, the activities of Klaipėda LNG terminal will be more intensive than ever - during this capacity allocation procedure, the largest number of capacities in the entire history of the LNG terminal was ordered. Not only the existing customers, but also the Norwegian energy company Equinor, which is planning to support its operations in the Baltic Sea region, have decided in advance to use the services and benefits of the LNG terminal. We’re happy that KN’s goals of increasing the competitiveness of the LNG terminal in the region, strengthening cooperation with existing and potential customers, and offering flexible technological and planning solutions are now bearing fruits and attracting new strategic partners’, says Mindaugas Navikas, Chief Sales Officer of KN.

Mindaugas Navikas draws attention to the trend that continues to be observed for several years now - the LNG terminal has the opportunity to flexibly respond to relevant market changes and adjust reloading and regasification needs accordingly at the terminal, and its customers actively make use of these benefits. Due to the constantly changing prices of natural gas in the global and European markets, the terminal’s customers more often choose to purchase LNG cargo from the spot market and order the necessary capacity during the course of the gas year. It is estimated that in the gas year of 2021 alone, the volume of regasification of spot cargoes will be twice as high if compared to the pre-ordered capacities.

Terminal users ordered capacity not only to meet Lithuania’s demand for gas, but also to supply it to Latvia, Estonia and Finland. While planning their activities, customers also take into account the additional market potential that will open up in 2022, the GIPL gas pipeline connection between Poland and Lithuania will start operating and Klaipėda LNG terminal users will be able to supply gas to the southern part of the region.

During the current gas year of 2021 (that lasted from October 1, 2020, to June 1 of this year), 49 LNG carriers have been accepted at the LNG terminal (compared to 50 in the same period of the previous year), and another 11 LNG carriers are expected by the end of the gas year. During this period, 2 million m3 of LNG have been brought to Lithuania, most of which came from the USA.

The company allocates capacity in accordance with the Regulations for the Use of the LNG Terminal agreed, approved and made public by the National Energy Regulatory Council and CEO of the company. During the LNG terminal capacity allocation, LNG regasification capacity and LNG reloading capacity were allocated in advance.

The total amount of LNG terminal capacity to be allocated is 3.75 billion nm3 or 44,625,000 MWh per year, applying a natural gas gross calorific value of 11.90 kWh/nm3.

The gas year of 2022 will begin on October 1, 2021, and last until September 30 of next year.

The company regularly updates its website with information on the available capacity of the LNG terminal, which can also be ordered during the gas year.

As global economies evolve their energy systems to tackle climate change challenges, a broad spectrum of solutions is under active evaluation. Carbon capture, utilisation and storage (CCUS) is a powerful technological enabler on the path towards sustainable energy future that is acknowledged in European Green Deal and widely seen as critical to achieve net-zero economy by 2050. Several CCUS projects are under way in Europe with clear commitment to create environmental and economic benefits for emission intensive industries that are hard to decarbonise.

AB Klaipedos nafta (KN), Larvik Shipping AS (LS) and Mitsui O.S.K. Lines, Ltd. (MOL) acknowledge the potential for CCUS and have reached an agreement to commence a feasibility study to develop liquefied CO2 (LCO2) loading facilities at KN’s existing infrastructure in Klaipeda, Lithuania. The entire concept shall be to develop a LCO2 logistics and value chain from Lithuania and potentially Baltic region with Klaipeda seaport at the centre.

The verified emissions from installations covered by the European Emissions Trading Scheme (ETS) in Lithuania alone reached approximately 6 million tonnes of CO2 in 2020 and put pressure to find the most suitable carbon management solution for the local market. The National Energy and Climate Action Plan of the Republic of Lithuania for 2021-2030 identified carbon capture as a promising area that requires further investigation to seek the best possible application in Lithuania.  Insights of carbon management gained in the feasibility study may also help accelerate the clean hydrogen production from fossil fuels.

KN recognises the importance and synergy of hydrogen and carbon markets and during 2020 participated in the formation of the Lithuanian Hydrogen Platform – a platform that brings industry and government together in the joint decarbonisation effort.
 
The main task of the feasibility study will be to identify optimised design and configuration to export CO2 to one or more sequestration facilities within Europe. It also includes the possibility to produce blue hydrogen as an important and necessary solution to reach zero emission economy.
Within the scope of the project KN covers the onshore and terminal handling part to, utilise its deep knowledge accumulated through oil product and LNG experience.
LS, who has more than 30 years track record in LCO2 marine transportation, accepted equity from MOL on 19^th March, 2021, and both companies now work closely to accelerate LCO2 business together with MOL’s extensive experience in transportation of various types of cargoes on world-wide basis. LS and MOL make contribution to bring efficient and feasible marine logistics solution.

With the above combination the parties intend to cover the major logistics part of entire CCUS value chain.

KN is an oil and LNG terminal operator company headquartered in Lithuania and has become a player in the global LNG market. KN brings proven developmental and operational know-how as well and bridge energy markets by enabling customers to supply and trade energy resources worldwide. KN currently owns and operates two oil and two LNG terminals in Lithuania, also is LNG terminal operator of largest gas to power project in Latin America located in Port of Açu, Brazil.

Larvik Shipping AS is a Norwegian ship management company headquartered in Larvik. It is one of very few companies in the world qualified to operate LCO2 vessels. With safe transportation and extensive cargo-handling know-how, LS has managed dedicated LCO2 tankers trading in Europe for more than 30 years.

MOL is a Japanese multi modal marine transport company headquartered in Tokyo, Japan. It is one of the largest shipping companies in the world, who operates more than 800 ships. MOL fleet includes dry cargo ships, liquefied natural gas carriers, Ro-Ro Car Carrier ships, tankers, container ships, and also diversifies its business to offshore business and maritime related industries such as container terminals.


 

The Klaipėda (Lithuania) liquefied natural gas (LNG) terminal, operated by KN (AB Klaipėdos Nafta) expects to receive LNG cargo from Egypt, the ‘Idku’ natural gas liquefaction plant to reach Klaipėda Seaport for the first time. The LNG carrier ‘LNG Fukurokuju’ is expected to deliver approx. 138,000 cubic metres of LNG.
 
After the planned maintenance and repair works, the LNG terminal, which has successfully resumed operations on May 1st, expects to receive cargo from Egypt on May 7th. The LNG carrier ‘LNG Fukurokuju’, built in 2016 and currently sailing under the flag of Bahamas, will visit the Klaipėda Seaport for the first time and also deliver the first ever cargo from Egypt to Lithuania.
 
‘As the prices of LNG are still high in Asia, a large part of cargo from Europe is diverted exactly there by taking advantage of the spot market opportunities, and a certain new-found niche is filled by Egypt, which has been less visible on the map of European LNG suppliers so far. What is more, Egypt announced in January that it would significantly increase exports to Europe to meet the growing demand for LNG here. Taking into account both the requirements of Klaipėda LNG terminal equipment and the requirements of the Lithuanian natural gas market, the natural gas liquefied in Egypt are suitable for our natural gas system in terms of its calorific and energy value’, says Mindaugas Navikas, Chief Sales Officer at KN.
 
According to Mindaugas Navikas, this natural gas year*, after the shutdown of ‘Equinor’ liquefaction plant in Norway, which plans to resume operations next spring, to match their commitments terminal users imported most cargo from the USA (about 82 %). In the natural gas year 2020 the majority of the LNG was imported from Norway (about 70 % ), as well as in 2019 (86 % from Norway).
 
Currently, Klaipėda LNG terminal is implementing an annual capacity allocation procedure, during which terminal users plan cargo and book capacities for the new gas year, which begins on October 1st, 2021.
 
By the start of the new gas year, 13 more LNG carriers are expected at the LNG terminal, with the ‘LNG Fukurokuju’ included in this number.
 
* The natural gas year is calculated from October 1st, 2020, to September 30th, 2021.