KN to launch study on LNG terminal capacity allocation

KN (AB Klaipėdos Nafta) is looking to undertake an evaluation of long-term capacity allocation alternatives and pricing for its Klaipėda LNG terminal.

The first stage of the process will be a public market consultation where the Lithuanian terminal operator will obtain prices indications for the study.

Darius Šilenskis, CEO of KN, explained the rationale behind the project. ‘The de facto exploitation of the LNG terminal demonstrates its benefits not only for the national but also for the regional natural gas market and gas consumers.

We believe, that together with the launch of the Balticconector connection between Estonia and Finland and further expansion of the natural gas transmission system in the region (GIPL connection with Poland), it will further stimulate the market participants’ interest in the long-term LNG terminal capacity allocation.’

The study will also consider the current pricing model used at the Klaipėda terminal to determine if changes should be made.

According to Šilenskis, ‘Currently, the methodology is based on the principles of the transmission system pricing model, which aims to ensure equal prices for different transmission system entry points and to increase the market competition. The methodology is not based on the operating costs of the LNG terminal and covers only a part of the total estimated operating costs.

‘We will seek to assess the possibilities of changing it, which could accordingly contribute to the reduction of the security supplement for the gas consumers.’

KN notes that after the public consultation period it is planning to appoint an external expert next January with delivery of the report slated for late spring 2021.

Lesley Bankes-Hughes

Lesley Bankes-Hughes