Lithuania's state-owned LNG terminal operator Klaipedos Nafta has softened its stance on third-party access to its planned terminal by announcing that it could supply neighbouring Latvia with natural gas from the floating unit.

The terminal could supply Latvia through its pipelines or by shipping the entire unit directly to Riga, according to Klaipedos Nafta CEO Rokas Masiulis.

Klaipedos Nafta had previously said that the terminal, which has a planned annual import capacity of between 2.1 billion cubic metres (Gm³) and 3.0Gm³, will solely serve Lithuania.

But the floating storage regasification unit, to be built at Klaipeda port by Norwegian Hoegh LNG, could be shipped to Riga if a Latvian port authority was willing to accept it, Masiulis said.

"Technically, this terminal in Klaipeda has no barriers to service the whole region," Masiulis told a press conference in Vilnius. "The vessel could be located in Riga in summer and supply Latvia's underground storage facility and then relocated to Klaipeda in winter."

Such an arrangement would be welcomed by Latvia, which houses the large Incukalns storage site. Riga's energy ministry said last year that capacity at Incukalns could be expanded to 3.2Gm³/year to store gas for the terminal.

Masiulis added that pipeline infrastructure connecting the two countries would need to be upgraded, implying that shipping the unit to Riga may be a more attractive option. Klaipedos Nafta is yet to make a decision on whether Latvia will have equal access to the terminal if the unit is relocated north for part of the year, a spokeswoman said. Similarly, the spokeswoman confirmed that no decision has been reached on whether Lithuania will have priority for LNG supply ahead of Latvia.

Recently, Lithuania has rebuffed overtures by neighbouring Latvia and Estonia to build a terminal to cater for the three countries' energy needs.

The spokeswoman added that Klaipedos Nafta has held talks with nine potential gas suppliers for the terminal and will issue a tender on gas contracts in the third quarter.

The Baltic nations are keen to lessen their dependence on neighbouring Russia for gas.

Earlier this month, Estonia electricity incumbent Elering named Dutch company Vopak LNG as its strategic partner for a feasibility study on a planned LNG terminal at Muuga harbour near Tallinn (see ESGM 2 May 2012). JE

Copyright 2012 Heren Energy Ltd. All Rights Reserved.

(Originally published May 24, 2012, in European Spot Gas Markets.)