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EU approves construction of Lithuania LNG terminal

11.19.2013  | 

The floating LNG terminal, due to start operating in late 2014 at the Baltic Sea port of Klaipeda, will help Lithuania avoid “unfair” pricing by its current sole gas supplier, Russia’s OAO Gazprom.

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By BRYAN BRADLEY
Bloomberg

The European Union approved the liquefied natural gas (LNG) terminal that Lithuania is building, clearing several potential legal hurdles, state-controlled terminal operator Klaipedos Nafta AB said.

The green light, which the European Council in Brussels will issue tomorrow, follows a two-year audit of the terminal’s compliance with EU rules on competition and state aid, Klaipedos Nafta General Director Rokas Masiulis said Tuesday at a news conference in Vilnius, the Lithuanian capital.

The floating terminal, due to start operating in late 2014 at the Baltic Sea port of Klaipeda, will help Lithuania avoid “unfair” pricing by its current sole gas supplier, Russia’s Gazprom, according to Prime Minister Algirdas Butkevicius. Lietuvos Dujos, the Lithuanian gas utility controlled by Gazprom and EON, asked the EU to block the project on the grounds that it violated competition rules.

“We’ve passed a very serious exam, crossing a sort of legal finish line that lets us now focus on construction,” Masiulis said. It also clears the way to secure some financing that is still pending, he said.

Financial guarantees

The European Investment Bank agreed in July to lend Klaipedos Nafta 87 million euros ($118 million) to finance about half the cost of construction. That loan couldn’t be accessed until the Lithuanian government issued a guarantee to the European Investment Bank, which wasn’t possible until the EU formally approved the project, according to Masiulis.

“The European Commission didn’t recommend changing anything in the project,” Masiulis said. “They found that everything is being done right to ensure the terminal will increase competition, opening our market to new suppliers.”

Construction of a jetty for the LNG ship at Klaipeda as well as a pipeline linking the terminal to Lithuania’s gas grid by December 2014, is proceeding on schedule, he said.



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