KLAIPEDA, Lithuania — The vast ship that eased into this misty seaport early on Monday was hailed by American and European officials as the strongest signal that the stranglehold Russia has on the Baltics and their energy needs can be broken. The vessel, the Independence, is a floating factory for converting liquefied natural gas into the burnable variety. It represents a direct challenge to the Russian way of doing business as many other countries in the European Union have dithered over how to deal with President Vladimir V. Putin and his attempts to reassert Russian influence over parts of the former Soviet empire like Ukraine. “We are now an energy-secure state,” Dalia Grybauskaite, the Lithuanian president, said at a ceremony that featured martial touches like a naval brass band, red flares and a cannon salute. “Nobody else from now on will be able to dictate to us the price of gas, or to buy our political will, or to bribe our politicians.” Lithuania Feels Squeeze in Sanctions War With RussiaSEPT. 24, 2014 “If we don’t like it, we can drop it fully and totally,” Ms. Grybauskaite said, referring to a possible severing of relations with Gazprom, the government-controlled Russian gas exporter, which supplies all of Lithuania’s gas. For Lithuania, which is just slightly larger than West Virginia, the floating terminal — a faster and generally cheaper option than building a terminal on land — is a big step toward energy independence from Russia. Europe has long declared such independence to be its goal, but has done little to achieve it. That makes Lithuania’s efforts to break free of Gazprom a significant example of how even countries that are bound by geography and history to Russia’s energy behemoth can find alternatives. “This was done because the government of Lithuania wanted to make this happen,” Amos J. Hochstein, acting special envoy for international energy affairs at the State Department, told a gas conference here on Monday. “This needs to be the inspiration for the rest of Europe,” said Mr. Hochstein, who urged the European Union to approve a short list of strategic infrastructure projects intended to improve its energy security. The American focus on the issue began in late 2008, when the government contributed more than $800,000 to Lithuania to help develop technical specifications for a liquefied natural gas terminal to provide “increased flexibility and competition” for the country. The Lithuanian government gave final approval for the project in 2010. Ms. Grybauskaite, who previously said that local companies and lawmakers with links to Gazprom and other Russian businesses meddled in the liquefied natural gas project, said on Monday that more energy independence could have been achieved sooner had there been greater political will in Lithuania. Lithuanian officials say they had already pushed Russia into bargaining — something it has long resisted — when Gazprom cut its gas prices by about 20 percent in May. “Consumers are already feeling lower prices of gas” as “a natural outcome of our terminal construction,” Rokas Masiulis, the Lithuanian energy minister, told reporters on Monday. The price that Lithuania was paying for liquefied natural gas was in “a very similar range” to the lower Gazprom price, he said. Continue reading the main storyContinue reading the main storyContinue reading the main story The first shipment of liquefied natural gas, set to arrive on Tuesday from the Norwegian company Statoil, is equivalent to 60 million cubic meters of natural gas. Further shipments from Statoil should reach the equivalent of 540 million cubic meters annually in the next five years. That is a fifth of Lithuania’s needs. Lithuania says the terminal, the only operation of its kind in the region, could become a beachhead to supply most of the needs of the other two Baltic states, Latvia and Estonia, which also rely on Russia for gas. Even so, the company managing the project, Klaipedos Nafta, the state-controlled oil terminal operator, has not yet sold the majority of the liquefied natural gas terminal’s capacity — one of the factors that raise the important question of whether the terminal makes economic as well as political sense. “Next year will show very real interest for the terminal,” said Mr. Masiulis, the energy minister. Another challenge for the project would be if Gazprom dropped prices to Lithuania to the point that running the terminal became uneconomical. Gazprom shrugged off the arrival of the vessel. “If Lithuanian consumers are willing to pay more to reduce their dependence, it’s their business,” a spokesman, Sergei Kupriyanov, said by email. The vessel was built in South Korea for the Norwegian company Hoegh, which is leasing it to Klaipedos Nafta under an arrangement that gives the Lithuanians the right to buy it after a decade. Lithuania is spending 448 million euros, or $568 million, for construction, maintenance and a 10-year lease on the floating terminal, including financing for state-backed loans, said Mantas Bartuska, the chief executive of Klaipedos Nafta. The vessel, which is three soccer fields in length and formally known as a floating gas storage and regasification unit, could not have been more timely for Lithuanians. The country of about three million people was the first former Soviet republic to reclaim its political independence. This year, Lithuania received approval to join the eurozone on Jan. 1, 2015. But it has waited 25 years to regain some control over its energy, which is a major expense for Lithuanian households and businesses. In the past, Lithuania paid more than its Baltic neighbors for Russian gas. Lithuania also says it feels more exposed than Latvia, which has gas storage facilities, and Estonia, which has shale oil resources. Gazprom had an ownership stake in Lithuania’s natural gas distribution network until this summer and part of Lithuania’s electrical infrastructure is still controlled from Moscow. Before the arrival of the vessel, Lithuanian commentators warned of the potential for Russian sabotage, and parts of the port were locked down Monday for its arrival. Linas Linkevicius, the Lithuanian foreign minister, suggested on his Twitter account on Oct. 19 that reports of a lost submarine in Swedish waters represented a “weird coincidence” when the liquefied natural gas vessel was crossing the Baltic Sea. Lithuanians continue to complain that the West has underestimated the dangers posed by Russia, which has an enclave in Kaliningrad, on the border with Lithuania, where Russia keeps a naval base. For analysts like Jonathan Stern of the Oxford Institute for Energy Studies, the project comes at the right time for Lithuania, partly because liquefied natural gas prices are expected to ease over the next two years. “One of the most interesting questions is when the long-term contracts run out in Lithuania next year,” Mr. Stern said, referring to Gazprom’s sales agreements. “Will the Lithuanians say they do not want to extend the contracts” because it is “geopolitically unacceptable to depend on Russian gas at all?”
Posted on: Wed, 29 Oct 2014 23:35:54 +0000
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