Thursday, 31 March, the National Energy Regulatory Council (NERC) approved new tariffs for LNG Terminal maintenance in line with the cost-based pricing principles. The security component paid by natural gas consumers in Lithuania no longer includes the fixed component of KN price as a result of the introduction of a EUR 0 (zero) tariff for the fixed component of LNG regasification price. The new pricing will enter into force on 1 May, when commercial operation of the Gas Interconnection Poland–Lithuania (GIPL) starts, and will apply until the end of the calendar year.
 
The LNG Terminal is one of KN’s activities regulated by the State, and the infrastructure operates on the basis of a transparent and open principle of third party access. According to the current pricing methodology for the LNG Terminal its operating costs are mainly covered by the additional security of supply component applied to the price of natural gas transmission services.
 
A part of the LNG Terminal maintenance costs is covered by the LNG Terminal users paying a variable LNG regasification price for the volume of LNG regasified at the LNG Terminal. The variable regasification service price is calculated according to the methodology approved by the NERC.
 
Recommendations of the NERC to revise the pricing of the LNG Terminal were submitted to the LNG Terminal operator taking into account the fact that natural gas market participants will be able to use the GIPL capacity as of 1 May 2022, and that these developments will diversify the supply of natural gas through pipelines not only in Lithuania, but also across the Baltic–Finnish region, as well as in Poland.
 
Taking into account the operations of GIPL, as well as the use of the LNG Terminal this year, KN – the operator of Klaipėda LNG Terminal has provided information for the recalculation of the fixed and the variable price components. According to the information provided by the company, the NERC has set the following pricing with effect from 1 May:

• The variable component of the LNG regasification price for 2022 is set at EUR 1.19/MWh (from 1 January to 30 April 2022 – EUR 0.41/MWh);
• The fixed component of the LNG regasification price to be included in the security component payable by natural gas consumers from 1 May 2022 is set at EUR 0/(MWh/day/year) (from 1 January to 30 April 2022 – EUR 149,88/(MWh/day/year)).

 
The total security component is also reduced respectively by around 60 % to EUR 102.98/(MWh/day/year) as of 1 May, compared to EUR 252.86/(MWh/day/year) effective as of January this year.
 
“The demand for LNG Terminal’s services keeps growing, therefore, we want to offer appropriate pricing that is universally applicable to gas market participants across the region – from Poland to Finland. In cases where the Terminal capacities are fully reserved, each Terminal user will pay the same price for the services provided at the Terminal, which will also contribute to the overall reduction in the security component for Lithuanian gas consumers. Meanwhile, we are proposing such solution for the current year, i.e. until 31 December 2022, but we do not exclude that a similar model will be proposed for future periods as well, following the transition to the allocation of long-term capacities of the Terminal. We hope that this pricing principle will also contribute to further strengthening of the competitiveness of the Terminal’s operations,” comments Mindaugas Navikas, KN Chief Commercial Officer.
 
Currently, KN is preparing for transition to the LNG Terminal's long-term capacity allocation model, which is planned to take effect from 1 January 2023. For this purpose, the relevant amendments to the LNG Terminal Regulations are being drafted and will shortly be presented for public market consultation. 
 
The NERC’s cap on LNG regasification revenues remains unchanged for 2022.