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2021 April 20 09:48

KN and AFRY sign agreement on long-term capacity allocation and pricing model study of Lithuanian LNG terminal

Image source: KN
KN (AB Klaipėdos Nafta), the operator of Lithuanian liquefied natural gas (LNG) terminal, and the Swedish company AFRY have signed an agreement on the long-term capacity allocation and pricing model study of the Lithuanian LNG terminal. According to the press release of KN, the study shall provide the answer on the best long-term capacity allocation mechanism as well as on tariffication model applicable for Klaipėda LNG terminal activities. The results of the study should be presented in the second half of this year.
 
AFRY is an international engineering, design and consulting company with a history of more than 120 years, and around 16,000 experts in the fields of infrastructure, industry and energy, operating worldwide and contributing to the development of sustainable solutions.
 
KN has previously announced that with the help of external experts it is planned to perform market analysis and evaluate the long-term and short-term capacity allocation and pricing mechanisms of European LNG terminals and identify which model would be the most suitable for Klaipeda LNG terminal. The aim is to ensure maximum actual long-term capacity utilization and efficient operation of the LNG terminal based on a cost-reflective tariff model.
 
“The utilisation of Klaipeda LNG terminal correlates with the development of natural gas transmission systems in the region and increases the interest of market participants. Therefore, we aim to ensure equal conditions to use LNG terminal services for all current and potential clients. The Baltic connector, natural gas transmission connection between Estonia and Finland, which started operating last year, and the GIPL connection between Lithuania and Poland, which will start operating next year, encourage us to evaluate how to make the most efficient use of LNG terminal capacity and review current pricing model. We also seek to assess the scope for methodological changes that could contribute to further reduction of the security supplement for gas consumers. In parallel with the study, KN will present this project to stakeholders, current and potential LNG terminal users. We strive for close cooperation with the market participants, transparent methodology and later on – the process of changing tariffs,” emphasizes Mindaugas Navikas, KN’s Chief Sales Officer.
 
“AFRY is delighted to have been awarded this contract to help develop the long-term capacity allocation mechanism for the Klaipeda LNG terminal. Working alongside KN and other stakeholders, we will be able to utilise our expertise on natural gas markets, global and European LNG trends and the regional market design to formulate the most efficient capacity allocation and tariff design. This will be an important development in the evolution of the Lithuanian and the wider regional market,” says Matt Brown, Vice President of AFRY Management Consulting.
 
Based on the study results, the rules of the LNG terminal will be amended accordingly, they will be coordinated with the National Energy Regulatory Council (VERT) and market participants during a public consultation. Changes to the LNG terminal rules will be presented to LNG terminal users and other stakeholders. This year, the LNG terminal capacity allocation procedure for the new 2022 gas year, scheduled for April, will follow the current methodology and pricing.