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Lithuania's LET agrees Russian natural gas supply terms for 2019: CEO

09 January 2019 , 12:07Neftegaz.RU433

Vilnius, January 9 - Neftegaz.RU. Lithuania's main gas importer, Lietuvos Energijos Tiekimas (LET), has agreed the terms of a new 1-year Russian gas import arrangement with Gazprom, LET CEO Mantas Mikalajunas said on January 8, Platts reported.


Mikalajunas told Platts that LET - formerly known as Lietuvos Duju Tiekimas - was close to finalizing the deal with the Russian gas giant. LET, which is part of the state-owned energy holding company Lietuvos Energija, moved to a 1-year supply option with Gazprom at the end of 2016 at what it described as «market prices.»


«Lietuvos Energijos Tiekimas has agreed with Gazprom on the terms and conditions for gas supply in 2019 and the contract is in the closing stages,» Mikalajunas said. «The supply is ongoing.»


Mikalajunas declined to disclose the commercial details of the latest contract, including the purchase volumes. Gazprom said in its 3rd-quarter financial report that it had sold 900 million m3 of gas to Lithuania in the 1st 9 months of 2018.


Until 2014, Lithuania had been entirely dependent on its gas imports from Russia and paid among the highest prices in Europe. The price Lithuania paid for Russian gas went up to around $500/1,000 m3 a few years ago from $85/1,000 m3 in 2003.


Lithuania - whose gas demand is small at around 2.5 Bcm/year - made it a strategic goal to reduce its dependence on Russian gas. The startup of Lithuania's LNG import facility at the end of 2014 led to Gazprom offering a significant discount on deliveries in 2015.


LET now has contracts with Norway's Statoil and US-based trader Koch for a combined 500 million m3/year, but has also bought regular LNG cargoes on the spot market. It also has access to the 4 Bcm/year Incukalns gas storage facility in neighboring Latvia after Riga opened up its gas market in 2017, giving LET 3 sources of gas supply.


The strategy to negotiate a short-term Russian gas supply deal could be indicative of a continuing gas market trend in Europe for less rigid contractual arrangements with Gazprom. In the past, Gazprom supplied Lithuania with Russian gas under the company's traditional long-term, oil-indexed contract model.



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