As natural gas consumption has dropped drastically in the energy sector, the minimum quantity of natural gas required for the operation of the Liquefied Natural Gas (LNG) Terminal will twice surpass the projected demand by energy producers. The designated supplier, company Litgas, forecasts that due to such changes in the market the average gas purchase price for energy producers may rise by approximately 50 percent. This shows that the existing designated supply model is no longer sustainable.
Klaipėda LNG terminal
Klaipėda LNG terminal
© DELFI (V.Spurytės nuotr.)

In 2014, Litgas was named the designated supplier which was legally obliged to supply 540 million cubic meters annually to the LNG terminal for five years, which is a minimum necessary to ensure uninterrupted operation of the LNG terminal.

Litgas director general Dominykas Tuckus said that in 2014-2015 the situation in the natural gas market, especially in the energy sector, changed radically. Consumption of natural gas fell dramatically due to investment in biofuel development, renovation of buildings and abolition of public service obligation quotas for supported electricity generation. According to the director general, natural gas consumption in the energy sector was forecast to reach around 6.03 TWh (580 million cubic metres) in 2015. However, in 2016 energy producers project to consume only around 2.73 TWh (260 million cubic metres) of natural gas - which is about twice below the minimum required quantity for the LNG terminal.

In November Litgas will submit to the National Commission for Energy Control and Prices (VKEKK) data on the establishment of designated supply tariff and projected natural gas price for energy producers in 2016. Based on the procedures, expenditure related to the realisation of surplus required quantity of gas in the domestic market will be included in the designated supply tariff for 2016. The expenditure could reach around EUR 11 per MWh.

If consumption by energy producers decreases below the minimum required quantity, all of the gas consumed by them in 2016 will be supplied from the LNG terminal. This would lead to natural gas price increase for energy producers by approximately 50 percent. In turn, this would lead to the increase of heating prices. For example, in Vilnius, heating prices could rise by 30 percent.

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