Klaipedos nafta to select LNG supplier for new terminal by year-end
VILNIUS. July 24 (Interfax) - Lithuania Klaipedos nafta plans to select an LNG supplier for the regasification terminal being built at the port of Klaipeda before the end of the year, CEO Rokas Masiulis told journalists on Wednesday following a meeting of the government commission on issues related to the LNG project.
"For now talks are underway. [There has been some delay] because a new law has been passed regulating how this gas must be delivered to Lithuania and over issues of naming a supplier, etc. We are currently busy with a reorganization that must conform with that law, after which the liquefied gas tender will continue," he said.
The company had previously planned to sign the supply contract this summer.
"I would predict the end of the year," Masiulis said when asked when the tender on LNG deliveries, which was announced last year, will be completed.
The number of contenders for the contract has declined from 16 originally. "There were 16 to begin with; then the list got shorter. I cannot disclose exactly how many there are. But there are quite enough for the best to be selected," Masiulis said.
Klaipedos nafta is also hopeful of reaching an agreement soon with the Latvian side on storage of gas at the Incukalns underground gas storage facility, the only such facility in the Baltic States. "I think [we will reach agreement] in the near future, perhaps in the course of a month. Right now of course it's vacation season, but we should reach agreement in September. We are close to an agreement. We are talking about potentially storing 100 million-300 million cubic meters," he said.
Masiulis did not disclose the terms on which Latvijas gaze would store the gas. "I can't say much. These are all commercial issues from both sides," he said, adding that as little storage space as possible would be utilized.
"This will depend on our schedule of operations. We will be flexible when deciding whether to use it [Incukalns]. It must be understood that using it will drive up the price of gas a bit, due to the expense of shipping it into and out of storage. We will try to use it as little as possible, but we need to have a margin of safety," he said.
Klaipedos nafta, the operator of the oil product terminal at the port of Klaipeda and the project operator for creation of an LNG regasification plant at the port, announced the tender on delivery of LNG to the future plant in October 2012. The company plans to buy 750 million cubic meters a year. The company is offering a contract for 10 years but is willing to negotiate on the term of deliveries.
The LNG terminal is expected to begin operations in 2014.
Klaipedos nafta originally planned to announced an open tender on the LNG deliveries. However, potential suppliers said they would prefer a closed bidding system, according to the BNS agency, so Klaipedos nafta arranged for a closed tender.
At the end of August 2012, Lithuanian Energy Minister Arvydas Sekmokas said five potential suppliers were in the running for the contract. He said Klaipedos nafta had signed protocols of intent with Spain's Gas Natural Fenosa and U.S. Cheniere and that there had been talks with Qatargas. Negotiations were also held with BP, Shell, as well as other companies, according to media reports.