Norwegian oil and gas major Statoil and Lithuanian natural gas supply and trading company Litgas have signed a memorandum of understanding (MoU) to establish a joint venture company which would provide small scale LNG bunkering services through the Klaipeda LNG terminal.
The new joint venture company is planned to be established in Lithuania later this year and would supply LNG as fuel to ships, small terminals in the Baltic Sea, and transport LNG by trucks to on-shore customers.
The joint venture company is expected to start its small scale supply operations in the Q4 of 2017 or sooner.
“Increased usage of the Klaipeda terminal will help to reduce infrastructure and maintenance costs incurred by the Lithuanian and Baltic gas consumers and position Klaipeda as an important hub in the Baltic LNG market,” General Manager of Litgas, Dominykas Tuckus, said.
It is predicted that Baltic Sea small scale LNG market can reach from 0.5 to 1 BCM a year by 2020.
Statoil and Litgas have already started negotiating with LNG carrier owners and operators to secure vessel capacity from the time the joint venture company becomes operational and receives final regulatory approvals.
“We believe that the small scale LNG market in the Baltic Sea has the potential to become commercially attractive business opportunity. The combined competencies of the two companies put the joint venture in a position to successfully develop this market and contribute to the usage of environmentally cleaner fuel in the Baltic region. Naturally, all relevant regulatory and corporate approvals will need to be obtained prior to the final investment decision,” Geir Heitmann, Chief Origination Officer, LNG, Statoil, said.
The possibility to cooperate on joint development of small scale LNG bunkering services was identified in a 5-year supply contract signed by Litgas and Statoil in August 2014.