Lithuania's LDT gaining foothold in Latvian market with cheap LNG
Lithuania's natural gas supply and trade company Lietuvos Duju Tiekimas (Lithuanian Gas Supply, or LDT), which buys liquefied natural gas (LNG) from the United States, says that it had signed a supply contract with Latvenergo, Latvia's largest gas consumer, adding that it expected to gain a 10 per cent market share in the neighbouring market this year and to become its second-biggest gas supplier after Latvijas Gaze.
Dominykas Tuckus, a member of the management board at Lietuvos Energija (Lithuanian Energy), which owns LDT, says that one of the factors that have helped LDT to gain a foothold in the Latvian gas market this year is the state-owned energy group's non-binding agreements with various global LNG players.
"This is not a oneoff deal. The Lietuvos Energija Group has already had trading activities in the other Baltic countries and we still manage to find ways to maintain our competitiveness. We are probably among the few in the Baltic states with a wide range of commercial contacts with global LNG suppliers and we have a sufficient portfolio that allows us to optimally regasify that amount," he said.
Mantas Mikalajunas, CEO of LDT, emphasised that LNG would make up the bulk of the 1.2 terawatt-hours of gas that the company plans to sell Latvia this year.
"Practically all gas will go (to Latvia) via the (Klaipeda) LNG terminal," he said.
Two US LNG cargoes of around 140,000 cubic meters each are to be delivered to LDT in August and September. Mikalajunas said that a part of the gas would be used in Lithuania, another part would go to Latvian companies, and yet another part would be stored in the neighbouring country's Incukalns underground gas storage facility.
According to the CEO, the first gas deliveries to Latvia started back in June. Trade was sluggish at that time but picked up in July when Latvian companies had to decide whether they would continue to purchase gas from the former monopolist Latvijas Gaze or look for new suppliers.
"Most companies made no moves and stayed with Latvijas Gaze, but they can change the supplier at any time. This is where the market potential lies," he said.
Mikalajunas told BNS that LDT had already started pumping gas to the Latvian storage facility, but he did not disclose any details, saying that it was not clear yet how much gas would have to be stored there.
"I can't say exactly, because this will depend on consumption in Lithuania and Latvia, but it will definitely be more than the mandatory amount to be stored," the CEO said.
When and what amounts of gas will be withdrawn from the storage facility and supplied to market will depend on prices, he added.