KN shareholders approved a decision on the acquisition of the FSRU Independence at the end of its lease agreement

Shareholders of KN, the operator of oil and liquefied natural gas (LNG) terminals, approved a decision on the acquisition of the FSRU Independence at the end of its lease agreement and the terms for the acquisition, which are predetermined in the Time Charter Party, KN says in its press release.

FSRU Independence has been leased since 2014 from Höegh LNG of Norway, which won an international tender for the supply of a storage vessel in 2012.

The Law on LNG Terminal in Lithuania provides that the LNG terminal operator shall select the most economically advantageous offer for the acquisition of a floating storage and regasification unit (FSRU) and shall acquire FSRU upon ownership right and become the owner by 31 December 2024 at the latest. The operation of the terminal shall be guaranteed until 31 December 2044.

LNG long-term import solution project, the most important part of which is the acquisition of the FSRU, contributes to the strengthening of the country's energy security and self-sufficiency by ensuring the possibility to meet the country's gas demand in alternative ways, and to guaranteeing the reliable production of electricity.

“Since the start of its operation, the terminal has lived up to its name and purpose - today we have our independence from the Russian “gas needle” ensured, our supply markets successfully diversified and are also able to import natural gas from around the world. Under current geopolitical tensions, the decision to acquire the FSRU is an important and necessary decision to ensure our strategic energy ambitions”, says Dainius Kreivys, Minister of Energy. 

“Value created by the LNG terminal is more than tangible. Our cost-benefit analysis shows that by operating the LNG terminal Lithuania saves gas consumers around EUR 140-150 million annually, depending on the gas price and the volume of gas consumed. In addition to these economic benefits, it is more than obvious that without this infrastructure, our industry and consumers would not only suffer potential economic losses due to possible price manipulation from Russia but would also have to take the risks of security of supply and business continuity. At the moment, the world's major powers, including those in Europe, are turning to the LNG terminals as one of the main guarantors of energy security. KN, with its unique competences and experience in the operation and development of this type of terminals worldwide, can successfully use these competences to contribute both to the generation of additional value for its shareholders and to a more sustainable and secure energy supply for other countries," says Darius Šilenskis, CEO of KN.

In order to identify the most economically viable FSRU option KN has conducted the market consultation and research on the acquisition of the FSRU and initiated international procurement procedure in 2021. During the procurement procedure, the potential suppliers of the FSRUs in principle acknowledged that they could not offer a more cost-effective solution than the current option, namely FSRU Independence. 

Following the shareholders' approval, KN shall inform Höegh LNG of its decision to exercise the option to redeem the FSRU Independence within the timeframe set out in the lease agreement, with a set deadline in December 2022. The purchase contract should be concluded no later than December 2024. Also, it is planned that KN will take additional decisions regarding the operation and management and registration of the vessel in 2022. 

In 2021, 62 percent of the total volume of gas imported to Lithuania and supplied to the consumers in Lithuania, Latvia, Estonia and Finland was imported through Klaipėda LNG terminal. The largest share of LNG, imported by the LNG terminal users through infrastructure in Klaipėda, was delivered from the USA.