Lithuania: Cheniere, Klaipedos Sign LNG Agreement

Seeking a more diversified source of supply and to boost energy security in Lithuania, Klaipedos Nafta has signed a Memorandum of Understanding (MOU) with Cheniere Energy, Inc to address its future natural gas needs and assess LNG purchase and supply options.

Lithuanian Energy Minister Arvydas Sekmokas said Cheniere is prepared to sell this gas for a third less than Russia's Gazprom.

"The gas that the Americans are offering is a third cheaper than what we are receiving from Gazprom," Sekmokas commented to Lietuvos Rytas.

Cheniere plans to liquefy and export shale gas, which will be transported to a planned LNG terminal at Klaipeda.

Klaipedos Nafta is in the process of building the first LNG import terminal on the Eastern Baltic coast, for use in Lithuania and potentially for export to its Baltic region neighbors.

The Klaipeda LNG receiving terminal project being designed with an initial LNG import capacity between 1.5 to 2.2 million tonnes per annum ("mtpa"), with expansion capabilities.

Lithuania decided to build the LNG terminal last summer, with a proposed capacity that would meet Lithuania's entire gas needs. Construction is to begin in 2011 and the terminal should be built by 2014.

Subject to the terms and conditions of the MOU, Cheniere and Klaipedos Nafta have agreed to proceed with negotiations to discuss various LNG supply structures, which if successful, would lead to negotiations of a long term LNG purchase and supply agreement or similar type agreement.

Cheniere operates the Sabine Pass LNG terminal and has initiated a project to add liquefaction services that would transform the terminal into a bi-directional facility capable of liquefying natural gas and exporting LNG in addition to importing and regasifying foreign-sourced LNG.

Source: Cheniere