Lithuania is building a liquefied natural gas (LNG) terminal at the port of Klaipeda.
The project, which is expected to be operational by 2014, will give the Baltic nation access to the world’s LNG market. Today, the nation’s existing natural gas infrastructure consists of a single pipeline owned by the Russian-government-controlled energy giant Gazprom.
The Lithuanian terminal would have a maximum capacity to re-gasify and supply 11 million cubic meters of gas per day, or 4 billion cubic meters (bcm) per year. The project includes a floating storage and re-gasification vessel, a new jetty and pipeline, and dredging of the port. The vessel itself is being built in South Korea and will be able to receive and process LNG from oceangoing supertankers.
Having a facility that can receive these LNG shipments is crucial to Lithuania’s energy future. Lithuania, which gained independence from the Soviet Union in 1991, is still almost entirely dependent upon foreign energy resources. Following the closure of Lithuania’s Ingalina nuclear power plant in 2009, the nation has had to rely upon natural gas and petroleum imports from Russia. Currently, 100 percent of Lithuania’s natural gas and 90 percent of its oil imports come from its eastern neighbor.
All three Baltic countries (Estonia, Latvia, and Lithuania) consumed a combined 5.6 bcm in 2011, so the project is capable of providing for most of the three countries’ natural gas consumption, provided all three agree on construction of a new gas pipeline that would free them (along with Poland) from their Soviet-era strategic dependence on Russia. The opening of the new LNG terminal is expected to reduce Lithuanian imports of Russian natural gas by 50 percent.
Lithuanian President Dalia Grybauskait? underscored this theme in her 2013 State of the Nation address:
If we fail to break the shackles of energy dependence, we will continue to be economically vulnerable. Because energy is the most dangerous geopolitical instrument used to belittle our economic, social and even political independence.
The United States could potentially help supply Lithuanian energy needs in the future. A bipartisan bill has been introduced in both the House of Representatives and the Senate that would lift restrictions against the export of U.S. natural gas to NATO allies, including Lithuania. The bill is a big step in the right direction. However, as Heritage’s Nicolas Loris explains, the U.S. should go further by treating LNG like any other good traded around the world and lifting export restrictions.
In addition to providing geopolitical benefits from allowing access to multiple gas sources, the new terminal is also expected to provide an economic benefit to Lithuanian citizens. Currently, Gazprom charges Lithuania a significantly higher price for its gas than it does other consumer nations such as Germany. When the terminal opens, Lithuanians will likely start to pay market rates for natural gas, allowing the country to breathe a little easier.