Statoil to supply gas to Lithuania in five-year deal


Statoil (STO +0.4%) signs a five-year deal with Lithuanian gas supplier Litgas to deliver 540M cubic meters/year of liquefied natural gas from 2015, a move that could end Lithuania's dependence on Russian gas.

STO's first shipment of LNG is set to be delivered at the Klaipeda terminal in December, with a new floating terminal set to begin commercial operations by Jan. 1, 2015.

Lithuania is currently dependent on Gazprom (OTCPK:OGZPY) for 100% of its gas, and the country has been paying 15% higher than the European average gas price.

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Comments (4)
  • sethmcs
    , contributor
    Comments (3535) | Send Message
     
    LNG is not cheap either. Wonder if Gazprom will strike back. Gazprom's production costs have to be much lower than Stat oil considering LNG uses 25% of the energy value to convert to liquid.
    21 Aug 2014, 01:13 PM Reply Like
  • Veritas1010
    , contributor
    Comments (3094) | Send Message
     
    Lithuania doesn't want Russian gas.

     

    A wise choice.
    21 Aug 2014, 08:58 PM Reply Like
  • Mr Cliff Fiscal
    , contributor
    Comments (162) | Send Message
     
    Currently Gazprom provide all gas consumed in Lithuania. The Statoil deal will equate to 18% of Lithuania's gas requirements. The news commentary states "a move that could end Lithuania's dependence on Russian gas". "Could" is the operative word of this sentence, which perhaps reflects wishful thinking on the part of the author. The fact is that Gazprom will still supply the remaining 82% of Lithuania's gas requirement and have recently (in July) signed a new long term gas supply deal with Lithuania at a reduced price which apparently undercuts the Statoil deal!
    22 Aug 2014, 05:52 AM Reply Like
  • Tollmingen
    , contributor
    Comments (21) | Send Message
     
    I am Lithuanian. There are few more things which were overlooked by comentators..It is all about possibility of Gazprom share price diving down very rapidly. 1) Gazprom is insisting on long term contracts. Availability of Statoil gives additional fexibility, because this contract is related to London gas price index. 2) the international arbitrage in Stockholm were Gazprom has to return to Lithuania 5 bn Litas (2 bn USD) is due soon - it might make an impact on Gazprom profitability very soon because other few countries are ready with similar claims watching at the outcome of this; 3) availability of Statoil gas in Lithuania almost automatically means the addided flexibility on other three countries which are currently 100% dependened on Gazprom: Latvia, Estonia and Finland. 4) Russia has an only one single pipe going to their Kaliningrad territory through Lithuania - so price negotiations through continental Russia pipe supply from Gazprom shows further uncertainity to Gazprom;
    24 Aug 2014, 03:10 AM Reply Like
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