Gazprom plans LNG import terminal in Baltic enclave

Tue Sep 24, 2013 5:49am EDT

Related Topics

* Terminal may strip Lithuania of transit fee revenues

* Gazprom, Lithuania in row over gas prices, distribution

MOSCOW, Sept 24 (Reuters) - Russia's Gazprom is looking into building a liquefied natural gas (LNG) import terminal on the Baltic Sea to supply the country's Kaliningrad enclave, amid a spat with neighbouring Lithuania over gas prices and distribution.

Gazprom, the world's biggest gas producer, supplies around 2 billion cubic meters of gas per year to Kaliningrad via Lithuania, paying transit fees.

However, Lithuania also buys its gas from Gazprom and, according to European Commission, pays more for the gas than any other EU state, leading to a dispute.

Gazprom said on Monday its Chief Executive Alexei Miller and Kaliningrad governor Nikolai Tsukanov had agreed to study the construction of an LNG import terminal, with an investment decision seen next year.

Gazprom had previously said in June it was looking into building an LNG plant in the Baltic Sea that would actually produce the gas, rather than just convert imported LNG.

Valery Nesterov, an analyst with Sberbank CIB, said Lithuania could lose transit fees from Gazprom if the Russian producer presses ahead with the import terminal.

However, Gazprom would probably have to find new sources of the frozen gas, as it currently only has one LNG producing plant - on the Russian Pacific island of Sakhalin.

Lithuania plans to start importing LNG itself in 2015 to reduce its dependence on Russian gas supplies, which totalled over 3 billion cubic metres in 2012 - small compared with Gazprom's total exports to Europe, but still a blow to the Russian company's revenues if that demand dried up.

Gazprom, which supplies a quarter of Europe's gas needs, is facing growing pressure from cash-strapped Western clients seeking to cut bills and to revise long-term oil-linked contracts.

($1 = 31.7992 Russian roubles) (Reporting by Katya Golubkova; Editing by Mark Potter)

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