Kaliningrad gas autonomy: Gazprom to complete construction of LNG terminal

Next year, Gazprom seeks to complete its sea-based liquefied natural gas (LNG) regasification terminal and expand the underground gasholder in Kaliningrad region. This will help the remote region not to depend on the gas pipeline running via Belarus and Lithuania.

“Construction of the terminal and the expansion of the underground gasholders will reserve the current system of gas supply by 100% and upgrade the energy efficiency of the Kaliningrad region,” says Gazprom in an official statement dedicated to the visit of Gazprom CEO Alexey Miller to the region.

According to Mikhail Korchemkin, Director General at East European Gas Analysis, Gazprom is going to “play with the valve” on the Lithuanian border and the LNG terminal will become a response to Lithuania’s anti-Russian trick with floating regasification terminal.

“Construction of the LNG terminal in the Kaliningrad region pursues a different goal - not to let Lithuania ‘play with the valve,’” says Alexey Grivach, deputy director of the National Energy Security Fund. “Getting a LNG terminal, though an expensive one, Lithuania may behave inadequately. The anti-Russia rhetoric has always been the hobby of that country’s government. Therefore, the risks of interruption of the gas transit to Kaliningrad through the pipeline via Lithuania are significant. So, it is necessary to seek other options.”

Grivach is sure that Gazprom will not refuse from the pipeline supplies, if there are no risks, because the LNG is much more expensive. Besides, the Lithuanian enterprises have no long-term contracts with Gazprom, but Lithuania will hardly stop buying Russian gas.

“In winter period when gas consumption grows rapidly, the LNG supplies will not be sufficient for Lithuania. This became evident as early as in the first quarter of the current,” Grivach says.

The LNG terminal in Lithuania’s Klaipėda was put into operation at the end of 2014. It cost the country 101 million euro. Vilnius will be paying another 61 million euro for leasing of the terminal’s vessel per year. Now, Lithuania receives LNG from Norway. This year the LNG price for Lithuania was by 44% higher than for the other EU countries importing liquefied gas. The Russian pipeline gas is cheaper 1.5-fold. However, last year the LNG supply totaled 400 million cubic meters or almost 20% of total consumption, the rest were Gazprom’s supplies. This year, LNG supplies will make up 67% of total. Lithuanian politicians admit that leasing of the LNG terminal vessel was a big mistake for the authorities of Lithuania. Minister of Energy Rokas Masiulis said the LNG terminal is used by 20%. One of the reasons is that the neighbors prefer the Russian pipeline gas to the expensive Norwegian LNG.