LNG Business Plan 20130220

LIQUEFIED NATURAL GAS (LNG) Terminal
BUSINESS PLAN
2013 February
CONTENT
Summary .......................................................................................... 3
LNG terminal project ........................................................................ 9
LNG terminal technology and infrastructure ...................................... 10
LNG terminal and marketing business model ..................................... 20
Business model of the LNG terminal ....................................................................... 20
LNG import and marketing business model ........................................................ 21
Project organization .......................................................................................................... 24
Implementation plan of the LNG terminal ......................................... 25
Project funding .............................................................................. 31
Need of funds for start-up of the LNG terminal business ........................... 31
Financing of the LNG terminal business (from 2015) ................................... 34
LNG import and trade financing activities............................................................ 35
Cost and benefit analysis of the LNG terminal ................................ 36
Ensurance of alternative gas supply to Lithuania ............................... 37
Ensuring competitive pricing ........................................................... 38
Benefits of the LNG terminal ........................................................... 40
Benefits of the LNG terminal for the State .......................................................... 40
Benefits of the LNG terminal to consumers of natural gas ........................ 42
LNG terminal benefits to the company implementing the project ......... 44
LNG supply market review............................................................................................ 45
LNG use for ship fuel (bunkering) the additional activity .................. 48
Possibilities of cooperation with Latvia and Estonia ............................ 49
SWOT analysis .............................................................................. 50
Summary
The National Energy Strategy (further referred to as a Strategy) which was approved by the Seimas of
the Republic of Lithuania on 26 June 2012 Resolution No. XI-2133 and on 18 January 2007 Resolution
No. X-1046, defines the basic strategic provisions and their directions of implementation by 2025,
where the main attention is focused on ensurance of energy security and in particular long-term natural
gas supply. Today Lithuania is dependent on a single external supplier of imported natural gas. To
eliminate the energy isolation in the gas sector and implement 20 October 2010 European Parliament
and Council Regulation (EU) No. 994/2010 on gas supply security measures, Member States of the
European Union were obliged to comply with directive N-1 standard of infrastructure in securing
alternative gas supply sources.
LNG terminal one of the key projects to ensure energy security, which creates the conditions
for the emergence of the natural gas market, and brings economic benefits to the State,
consumers and the company executing the project.
The Law on Liquefied Natural Gas Terminal of the Republic of Lithuania dated 12 June 2012 (No. XI2053) establishes the general principles and requirements for the construction, operation and
exploitation of a liquefied natural gas terminal in the Republic of Lithuania and forms a legal, financial
and organizational framework for the implementation of the project on a liquefied natural gas terminal.
Lithuania currently imports natural gas from the outer sole supplier of natural gas in accordance
with the rules, pricing and terms of this supplier. Without possibility of choice, there is no gas
market. When the LNG terminal project is implemented, the Lithuanian natural gas customers
will get the opportunity not only to purchase natural gas from different suppliers, but also to
choose from new products: short-term gas supply contracts at market prices and new pricing
principles (i. e. without linking gas prices to oil prices).
The purpose of this business plan is to present the importance of LNG terminal project, economic
benefits of natural gas to consumers, the company executing the project, the State and to provide
technical solutions and the principles of terminal business model.
LNG terminal the project ensuring an alternative natural gas supply, which:
will help to resolve historically unfolding the problem of dependence of Lithuania on a single
external supplier of gas from Russia (gas is supplied by one gas pipeline, which passes through
Belarus);
will reduce OAO Gazprom possibilities to use its dominant position and to exercise the gas
pricing policy, the price of gas imported to Lithuania is one of the highest in Europe and
significantly exceeds the gas prices in international markets;
will create an opportunity for gas market participants to take part in the international gas
markets and thus to reduce the average price of imported natural gas;
will provide an opportunity to choose new market products short-term contracts with a pricing
mechanism not linked to oil prices and take advantage of the global gas market opportunities;
3
will provide alternative gas supply routes, by implementing European Union directive N-1
standard of infrastructure, which will be launched on December 2014.
The main aims raised to the LNG terminal project are:

to start LNG terminal no later than 2014, December;
to develop an alternative source of supply of natural gas;
to create an opportunity for Lithuania to self-sufficiently supply itself with natural gas needed to
meet the demand of the first necessity;
to create conditions for development of gas markets in Lithuania and the Baltic countries and
create opportunities for short-term gas purchase contracts and open the option for pricing not
linked to the oil product price;
to provide an opportunity for Lithuania to participate in the international gas markets.
The maximum technical regasification capacity of the LNG terminal will be 4 bcm per year, which can
be utilized as follows:
1. when in 2013 SC Lietuvos dujos constructs the gas-main branch Jurbarkas Klaipda, the
terminal will supply up to 2 bcm gas into the system per year;
2. after replacement of gas-main branch Klaipda Kurnai, and increasing its diameter from
300 mm to 700 mm, the terminal will be capable to supply 4 bcm gas into the system per year
and, if necessary, will supply gas throughout the country (except for peak consumption in
winter periods).
LNG terminal type and size
Floating Storage and Regasification Unit - FSRU (170 thousand m3 volume, with regasification
equipment) was contracted on 2 March 2012 from Hoegh LNG, signing 10-year lease agreement with
the purchase option.
FSRU type, as compared with the onshore terminal, has been chosen taking into account:
50 percent lower capital investment;
2 year-shorter period of the project implementation;
more flexible technology (FSRU can be moved to another location).
LNG terminal size of 170 thousand m3 was chosen according to the following:
LNG supply costs due to economy of scale of a larger LNG terminal are lower over 40 percent,
compared to the smaller terminal;
the larger terminal ensures longer period (1020 days) of first necessity consumer needs,
without LNG resupply;
Construction costs of LNG terminals differ only 1015 percent, depending on sizes.
The project business model
LNG terminal and its business will be held in the State-controlled company.
4
Established LNG terminal infrastructure (FSRU, jetty infratsructure and gas pipeline,
connecting the terminal to the gas grid) will be transferred to State-controlled natural gas
transmission system operator and assigned to the natural gas infrastructure.
25 percent rule
Currently there is no competition in the Lithuanian natural gas market. Gas is bought from one supplier
with fixed terms and pricing. Natural gas supply contracts are concluded exclusively for long-term in
such way binding to the sole external supplier without leaving any options for an alternative. Therefore:
when LNG infrastructure is created, it is also necessary to create regulatory environment that
allows access to the global natural gas market opportunities;
to promote the efficient competitiveness of natural gas supply sources and to ensure LNG
terminals activity (i.e., LNG terminal technological capacity needed to continuously and
effectively meet the country's natural gas demand), imported natural gas quantity through the
LNG terminal must be at least 25 percent of total consumption of natural gas in the Republic of
Lithuania per year;
the 25 percent rule, in order to ensure competitive equality, will be applied equally both to the
gas, supplied through the LNG terminal and through the pipelines;
25 percent rule shall prevent the current monopolist from concluding long-term contracts with
suppliers and delaying of gas market introduction into the country;
in order to protect the interests of gas consumers in Lithuania, the Government of the Republic
of Lithuania will establish through the LNG terminal and pipelines imported and in the internal
market of Republic of Lithuania consumed natural gas price cap;
when suppliers will get used to the new opportunities opened by LNG terminal and gas market
is fully developed, the 25 percent rule will be withdrawn.
Project economics
Supplying 2 bcm LNG (maximum throughput of the infrastructure from 2015) and taking into account
actual market prices of 2012 (National Balancing Point Exchange) Lithuanian consumers would save
up to 0,4 bn. LTL per year;
Influence of all fixed business costs and investments into LNG terminal will amount to 23 percent (5
7 ct per m3) in the final price of natural gas tariff. After 10 years, when FSRU is redeemed, influence of
terminals costs will reduce by 50 percent;
Utilization of the LNG terminal for the needs of other Baltic countries, infrastructure costs would
decrease proportionally for consumers in Lithuania.
Lithuanian
consumption
(bcm)
Russian gas
price 2012
average
(LTL/1000 m3)
LNG price* with

transportation
and LNG
terminal costs
(LTL/1000 m3)
Lithuanian
expenditures
on gas
(bn. LTL)
The current situation

By OAO Gazprom imported gas
3,0
1329
1,0
1329
Imported LNG gas
2,0
3,99
Alternative
Total
1,33
1130
2,26
3,0
3,59
Ekonomic benefits (bn. Lt)
0,40
*(2011 average NBP + transportation costs)
Influence of all fixed business costs and investments into LNG terminal will amount to 23 percent (5
7 ct per m3) in the final price of natural gas tariff. After 10 years, when FSRU is redeemed, influence of
terminals costs will reduce by 50 percent;
Utilization of the LNG terminal for the needs of other Baltic countries, infrastructure costs would
decrease proportionally for consumers in Lithuania.
Project investments
Demand of LNG terminal project investments is estimated to be LTL 613 million. These investments
will be made by SC Klaipdos Nafta and Klaipda State Seaport Authority using their own and/or
borrowed funds.
Investments of Klaipda State Seaport Authority will amount to LTL 160 million, and will be used for
port dredging works and construction of jetty infrastructure.
Klaipdos Nafta investments*, LTL million
2012
1. Project management and infrastructure testing (incl. cost
30
of LNG for testing purposes)
2. LNG terminal gas pipeline and gas metering station -
2013
2014
Total
78
116
224
53
88
141
6
design and construction

3. LNG terminal jetty suprastructure design and construction Total:
30
*according to project FEED prepared by the lead advisor Fluor
29
59
88
160
263
453
Project financing
AB Klaipdos nafta (KN)
LNG Terminal Trading Activities
LNG Terminal Infrastructure

Demand for
financing and
guarantees
$US 50 M
guarantee for the
FSRU operating
lease
Potential
resources
Collateral
$US 50 M
Accounts
receivable from gas
tariff (from 2015)
commercial bank
guarantee
250m LTL
450m LTL
Investments in:
Project
management
Loan from an
institutional
(NIB, EIB, EBRD)
or commercial
bank
(for 20-25 years)
Gas pipelines
200m LTL
Jetty facilities
compensation of
investments via
gas tariff
(FY2013-2014)
Approved.
LNG Terminal
tangible assets
Demand for
financing and
guarantees
Potential
resources
bank guarantee for

gas supply
guarantee from a
commercial bank
200m LTL State

guarantee
Collateral
KN guarantee/ oil
terminal assets
and cash flows
LNG Terminal
trade accounts
receivable and
inventories
Guarantees from
key buyers
investment in
Working Capital
credit facility from a

commercial bank
Guarantees from
export credit
agencies
100m LTL
KN cash
investment
Project investments are going to be finaced from the following sources:

LTL 250 million will be borrowed from Lithuanian and/or international financial institutions;
LTL 200 million will be natural gas consumers funds, i.e., revenue from the additional
component to the upper limit of the natural gas transmission tariff (the LNG terminal premium)
in 2013 and in 2014 (funds from the LNG terminal premium collected from gas transmission
tariff in 2013 will amount to LTL 113,798 thousand).
The Company will also secure LTL 120 million overdraft facility for cashflow management
purposes until long-term financing is secured in relation to the fact that cash inflow from LNG
terminal premium will come after 5 months from the relative investment period.
The financial resources of the Company during the project period could amount to about LTL
100 million. The Company could allocate these funds towards financing the gas trading
activities through LNG terminal.
Besides, the Company is going to address commercial banks for: (1) a bank guarantee in the
amount of $ 50 million intended for securing the performance of the contract for the lease of the
FSRU, (2) a bank guarantee intended for securing the performance of the gas supply contract,
(3) a bank loan intended for formation of the working capital necessary for gas purchasing.
Also, seeking to secure proper performance of possible financial obligations to financial
institutions, the Company has submitted an application to the Ministry of Energy of the
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Republic of Lithuania, asking it to address the Ministry of Finance of the Republic of Lithuania
for including a limit of State guarantee intended for financing loans for investments into the
LNG terminal infrastructure (LTL 200 million), into the draft Law of the Republic of Lithuania
on Approval of the Financial Indicators of the State Budget and Municipal Budgets for 2013.
The requested limit was included into State Budget of 2013.
Environmental Impact Assessment
Regional Environmental Protection Department of Klaipda by the Ministry of Environment of the
Republic of Lithuania on 22 October 2012 has granted development consent on construction and
activities of Liquefied Natural Gas Import Terminal and Related Objects of Infrastructure in the
southern part of Klaipda State Seaport nearby Pigs back Island. The aforementioned consent finalised
the procedure of environmental impact assessment on LNG terminal project.
LNG terminal project implementation plan
LNG Terminal
launch
2011
Q1
FSRU
Q2
Q3
2012
Q4
Q1
Q2
FSRU lease
agreement
2013
Q3
Q4
Q1
Q2
2014
Q3
Q4
Q1
Q2
Q3
2015
Q4
Q1
Construction of FSRU and delivery to the Port of Klaipda
Port dredging by Port of Klaipda
Jetty
Pre-project study
Pre-project study
Gas pipelines
Jetty EPC
tender
Design and onstruction of jetty (EPC)

by Port of Klaipda and Klaipdos nafta
Pipeline EPC
tender
Design and connection LNG Terminal to

the gas grid (EPC)
Construction of gas main Jurbarkas Klaipda

by Lietuvos dujos
Environmental Impact
Assessment (EIA)
Process items
Territory planning and

construction permit
Preparation of Project financing
structure and loan procurement
Project financing
State
guarantee
Arrangement of LNG supply
Gas trading
Arrangement of NG
sales
Legal environment
assurance
Law on LNG
Terminal
Finished
Testing and
commissioning works
Rules on gas
supply
diversification
In progress
Performed by third
parties
LNG terminal project
LNG terminal technology and infrastructure

Basic function of LNG terminal is to receive and store LNG, to gasify and deliver it to the magistral
network. When choosing a terminal technology, two opportunities were evaluated: FSRU technology
and onshore terminal. Executing the LNG project, FSRU technology was selected for the following
reasons:
50 percent lower capital investments;
2 year-shorter period of the project implementation;
more flexible technology (FSRU can be moved to another location or used as a LNG carrier).
In 2010 by decision of interdepartamental work groups, the most appropriate underlying location of the
LNG terminal was chosen the southern part of Klaipda seaport at Kiauls Nugaros island.
LNG natural gas technical part of the terminal project includes:
A. acquisition and delivery of FSRU with a regasification facility to the harbor of Klaipda, and
connection with the pipeline;
B. upgrade of the harbor infrastructure for the LNG terminal (harbor dredging, jetty construction,
equipment installation);
C. LNG gas pipeline connection with the gas pipeline (construction of 17 km high pressure
pipeline to the gas transmission system).
Figure No. 1a. The LNG terminal project components
High pressure
loading arm
High pressure gas pipelines

18 km
Jetty
LNG carrier
Floating Storage and

Regasification Unit (FSRU)
FSRU
Jetty
LNG storage capacity:

170.000 m3
Regasification capacity:
~11 mmcm/day
Leased from Hegh LNG for
10 years with a purchase
option
Gas metering
station
Offshore jetty facility

located in the southern part of
the Port of Klaipda
Gas pipelines
18 km long and 700 mm wide

gas pipeline that connects
FSRU to the gas grid;
Includes 3 km of horizontal
directional drilling under the
lagoon
10
Figure No. 1b. The LNG terminal project location
Baltic
sea
Jetty and
FSRU
Pigs Back
island
Gas pipeline
11
A. FSRU with a regasification facility

FSRU is a LNG natural gas tanker with a built-regasification facility. Klaipedos Nafta signed 10-year
FSRU lease with a purchase option agreement with Norwegian company Hoegh LNG on 2 March
2012.
Figure No. 2. The main characteristics of FSRU
Manufacturer of the FSRU Hyundai

Heavy Industries;
Date of manufacture 2014.
The main characteristics of FSRU:
Length 294 m, width 46 m, draught
12,6 m;
Cargo tank 170 000 m3 (membrane
type).
FSRU is designed to operate at the following scenarios:

continuous supply of gas to the gas transmission system;
at the same time to receive imported gas and to supply it into the gas-main;
at the same time to supply gas into the gas-main and to fill smaller tankers with LNG;
LNG import;
LNG export;
trade, receiving/delivering LNG to other ports.
Parameters of FSRU
Comprehensive market analysis was made choosing FSRU. The main criteria for choosing a new ship
were:
Small ships of 60.000 m3 storage capacity have limited availability in the market. The average
size of floating gas carriers is 125 000150 000 m3. Distribution of ships depending on size:
up to 130 thousand m3 69 pcs.
130160 thousand m3 249 pcs.
over 160 thousand m3 89 pcs.
The vast majority of old ships are MOSS type (spherical tanks) that are visually polluting the
environment. When ships are constantly in the port, visual pollution is an important criterion of
selection.
The proposed small-capacity ships are 2030 years old. To convert them into the floating
container with a regasification facility is risky due to the technical condition (corrosion,
resistance).
12
Converting old small-capacity ships, raises the problem of installation of regasification facility
on board. Due to space constraints evaporators should be installed on the ground that would
require additional investments and land plot.
Older ship design useful life is 30 years, when the new designs are 40 years.
Old ships are subject to greater LNG losses due to evaporation, which makes up 0.2 percent per
day, while the new ships LNG loss is from 0.1 to 0.15 percent per day.
Ships external dimensions differ not as much compared to the storage capacity:
Table No. 1. Characteristic data of LNG ships
Dimensions \ ships
75.000
volume
Name of a ship
Cheikh El Mokrani
Length of a ship, m
220
Width of a ship, m
23
Draught of a ship, m
9,8
Loss of gas, m3
150
138.000
170.000
Exelerate (2005)
277
43,5
11,5
215
Hoegh LNG
290
46
11,6
250
The old ships due the old technology (used steam turbines) are less effective, i.e., consume
more fuel and carry less cargo. In addition, the crew composition working on board is the same;
i.e., variable costs are proportionaly higher than that of new ships.
Increased volume makes FSRU more flexible for cargo acceptance, regasification, and LNG
trade.
Considering that most of currently floating LNG carriers are of 140 000 m3 volume, therefore it
is likely that carriers of similar size will be coming to Klaipda. Acquiring FSRU of lower
volume than the entering gas carrier, will raise a problem of gas carrier demurrage. Berthed at
LNG ship-storage, a gas carrier will have to wait until FSRU containers will be able to take the
rest of the cargo. It may take several days and can be expensive, given that the cost of
chartering the ship is 115 000 US dollars per day or more.
Having larger FSRU may reduce transportation costs, because if FSRU has smaller tanks than a
LNG carrier, additional lease costs will be incurred as LNG carrier would not be able to unload
all quantity of LNG.
13
Figure No. 3. LNG transportation costs (in millions of LTL)
Source: Hoegh Ltd.
The supplier of FSRU was selected by public procurement, in which 3 major participants have
participated, always competing in this type of projects, they are: Norwegian Hoegh LNG, Golar LNG,
and the American Exelerate. Hoegh LNG was selected due to attractive price and technical
characteristics of FSRU.
Table No. 2. The main parameters of FSRU
The main parameters of the ship

170,000 m3
volume
Increased volume of liquefied natural gas storage with a regasification facility

makes it more flexible for cargo acceptance, LNG regasification and LNG
trading, in order to exploit favorable market conditions:
Liquefied natural gas storage with a regasification facility must be higher
than incoming LNG carriers;
The cheapest way is to supply gas with 130,000 to 160,000 m3 capacity
tankers, which make up 61 percent of tankers in the world;
Compared to the lower capacity terminal (i.e. 90,000 m3) due to
economies of scale transportation costs to LNG terminal are smaller by 44
percent;
FSRU prices vary slightly, depending on the size. For example, SC Klaipdos
nafta offered in a public tender LNG storage capacity of 130,000170,000 m3
with a regasification facility and offered lease prices were very close.
Regasification
capacity
The maximum capacity is 4 bcm of natural gas per year.
The newly built

ship
More efficient work, durability, and less pollution to the environment:

Less loss of gas and more efficient fuel consumption per year (70 mln.
14
Security
LTL lower costs every year);

Built to work in northern conditions;
Estimated useful life 40 years, compared with up to 30-year useful
period of the old generation ships.
The new FSRU has installed the most modern security system that meets the
strictest safety requirements (SIGTTO).
It was decided to lease liquefied natural gas storage with a regasification facility rather than buy
directly from the shipyard for the following reasons:
Table No. 3. Comparison of FSRU purchase and lease
Criteria
Purchase
Funds
Construction works of FSRU in the

shipyard would cost about 250 mln.
EUR. Therefore, it would require a
huge initial capital investment. The
Payments set out over 10 years,
Company could not immediately pay funded from the Companys business.
the total amount, therefore, would
State funds are not required.
require public funds. Funding for the
project would take additionally 1,5
years.
Business risk
Since the moment of purchase of the

facility, the owner would assume the
risk of equipment failure costs (in the
current case Hoegh LNG Ltd).
During 10-year lease period, all risks

associated with unforeseen costs for
repairs of facility shall be borne by
the ship owner (Hoegh LNG Ltd).
Ship design
Lithuania does not have the

experience in LNG ship design;
employment of specialists would be
expensive (additionally 50 mln.
EUR).
Hoegh has its own specialists which

have designed flotilla of LNG ships
and 4 FSRUs.
Service is included in the lease price.
Lithuania does not have the

experience to service FSRU.
Hoegh leased FSRU will be staffed

with a professional crew.
During the term of lease the Company
will gain necessary experience.
Ship management
Lease
15
Time
Until the end of 2014, for the

construction of LNG ships there are
no available shipyards.
It would be possible to acquire one
only after 2016.
None of 11 potential manufacturers
have offered a contract with ships
delivery on December 2014.
Hoegh Ltd. has a contract with a

shipyard in South Korea since 2009.
In the initial round of negotiations, all
suppliers of the FSRU offered only
the lease option, it is a standard
practice in this market, and thus, LNG
industry is still considered as a new
one. As a result the Company also
managed to get an offer with a
purchase option at the end of the lease
period.
B. Required changes to the harbor infrastructure

For safe entrance of LNG ships into the harbor of Klaipda up to to Kiauls nugaros island, it is
necessary to fully complete the planned inner harbor channel dredging works and additionally deepen
the water area of LNG vessel in its turning basin area.
The harbor channel dredging is the responsibility of Klaipda State Seaport Authority (hereinafter
referred to as KSSA), Harbour dredging works have already been foreseen in the strategic plans.
According to cooperation agreement signed on 5 July 2012 between Klaipdos nafta and KSSA, KSSA
is obligated to finish dredging works and transfer LNG terminal construction site until end of June
2013, when the construction of jetty and pipeline starts. KSSA has successfuly finished port dredging
works tender, which also includes dredging of LNG terminal site, and has signed an agreement with the
contractor which had won the tender. KSSA started dredging works in February 2013.
KSSA will carry out navigational surveys and will prepare relevant changes for the rules of the harbor.
Navigators and vessel traffic service operators will be trained in the use of new navigational systems
related to the leading of LNG carriers up to the LNG terminal.
Next stage adaptation of the harbor infrastructure would be construction of the LNG terminal jetty,
where the FSRU will be moored. The entering LNG carriers will be moored to the FSRU and LNG
will be unloaded to the FSRU using transmission sleeves. The jetty infrastructure and suprastructure
consists of: high pressure platform, service platform, mooring landings, air bridges, observation towers,
control rooms, fire protection equipment, technical service cranes, and high pressure gas transmission
sleeves as well as other necessary equipment.
In May 2012 LNG terminal jetty front-end engineering design was prepared. In August 2012 LNG
terminal jetty design and construction tender was launched. The contract with the tender winner is
expected to be signed in March 2013. Design works are scheduled to be performed until June 2013,
construction works until the III quarter of 2014.
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C. LNG terminal connection with the gas-main

Route length of the LNG terminals connecting gas pipeline with the gas transmission grid is about 18
km, of which 3 km are under the Curonian Lagoon. The beginning of the route the northern side of
Kiauls Nugara island, where parking plot of the FSRU is assigned. The LNG terminals pipeline
connection to the gas transmission grid will be near Daupar village, at the gas distribution station
DSS2 operated by Lietuvos Dujos. Diameter of the planned pipeline is 700 mm, capacity 11 mln. m3
per day, allowing the maximum capacity utilization of the LNG terminal.
In May 2012 LNG terminal pipeline front-end engineering design was prepared. In July 2012 LNG
terminal pipeline design and construction tender was launched. The tender winner was announced on
21 December 2012 a consortium between Kauno Dujotiekio Statyba and iauli dujotiekio statyba.
17
Capacity of the LNG terminal

Capacity demand depends on three main criteria:
General countrys gas demand;
The needs of the most sensitive natural gas consumers;
Constraints of Lithuanian natural gas infrastructure (capacity of gas-mains).
Total demand for natural gas
Lithuania has a number of key gas-consuming sectors: households, energy, industry, and other. Most of
the natural gas is used in thermal energy production (from 0,5 to 2,2 bcm per year) and the industry that
uses natural gas as a raw material, which has a continuous, low seasonal gas flow (about 0.71.5 bcm
per year).
Total demand of Lithuanias natural gas makes up around 3 bcm/year. Large and unique user, using
natural gas for raw material needs, is SC Achema which consumes up to one third of the total countrys
amount.
Source: Department of Statistics
Ensuring of the first necessity supply

The primary goal of the LNG terminal is to ensure the first necessity supply of natural gas to
consumers, i.e. public and domestic users, production of heat and industry, which must be ensured
uninterrupted gas supply.
Consumers of the first necessity consume an average from 0.9 to 1.5 bcm per year. Monthly
consumption varies greatly during the cold season consumption may be five times more than in
summer. The diagrams below show that Lithuanias natural gas consumption is characterized as high
seasonality, especially excluding SC Achema (in Lithuania the highest recorded daily consumption of
natural gas 18.2 bcm, i.e. instantaneous equivalent of almost 7 bcm per year of consumed gas
quantity).
18
LNG terminal will ensure that during the coldest winter the first necessity needs of consumers will be
met even in the disruption of supply from Russia.
Constraints of natural gas infrastructure
Lithuanian natural gas transmission infrastructure is adapted to supply gas in the east-west direction
(through Belarus system of gas-mains), so without increasing the current capacity of the pipelines, the
maximum capacity to supply gas from the LNG terminal will reach around 2 bcm per year, because the
system of gas-main is not sufficiently developed. Upgrading pipeline branch Klaipda-Kurnai in the
north, it would be possible to use the maximum capacity of the LNG terminal (up to 4 bcm per year).
Source: SAIC
Taking into account the above reviewed criteria, during the medium term 2 bcm capacity of the LNG
terminal per annum will ensure natural gas supply of the first necessity.
19
LNG terminal and marketing business model

Business model of the LNG terminal
LNG terminal project is scheduled for completion on December 2014. Implementing the project, two
independent activities will be created:
1. LNG terminal a part of gas supply infrastructure system, after the Project is implemented,
will be passed to the State-controlled transmission system operator;
2. LNG import and trade a share of gas trading and supply market remains to Klaipdos Nafta.
The basic functions of the LNG terminal:
3. LNG storage, regasification and gas supply to the countrys gas-main networks;
4. Other services of the terminal: LNG fuel supply to small consumers (ship fuel, reserve fuel for
boilers, small power plants).
The LNG terminal facility will complement and enrich the countrys current natural gas supply
infrastructure, creating opportunities for diversification of supply, reducing dependence on a single
external supplier of natural gas, increasing the security of gas supply and fulfilling the EU directive N1 standard of infrastructure (assumptions for Lithuanias self-sufficiency are dependant on natural gas
required to meet the demand of the first need).
Natural gas suppliers in Lithuania will be able to get the best price by comparing prices in the
international gas markets and OAO Gazprom prices.
20
Figure No. 7a. Business model of the LNG terminal
For effective performance management and transparency of processes, activities are intended to be
separated. The above diagram illustrates the LNG terminal and the volume of trading activities and
relationships in between them.
LNG terminal operating costs are to be included in the gas transmission tariff. According to 2011
consumption volumes divided by the terminal operating costs would result in around 5 ct/m3 additional
cost for gas consumers. After 10 years, the terminal costs would fall 50 percent due to the repaid
financial obligations associated with financing of the project.
LNG import and marketing business model

For effective performance management and transparency of processes LNG import and trading activity
was separated from Klaipdos Nafta on 17 December 2012 by establishing a subsidiary LITGAS UAB.
The subsidiary will lease the LNG terminal infrastructure and will import LNG to the Lithuanian
market and, if needed, to the bordering markets.
Taking into account the Lithuanian natural gas sector needs, a trade enterprise shall have the following
objectives:
to reduce natural gas prices in Lithuania, participating in the international LNG markets;
ensure access for the Lithuanian gas customers to world markets and availability of short-term
and long-term gas supply contracts without linking prices to oil product indexes.
21
Figure No. 7b. Import and trade enterprise business model of the LNG terminal
LNG supply assurance

Only real import of LNG natural gas through the LNG terminal will create competitive conditions for
OAO Gazprom to reduce the price for supplied natural gas to the Republic of Lithuania, or at least not
to increase it. LNG supply model directly depends on the Company achieving its objectives:
Free capacities of the LNG terminal would be used for trade in the spot markets at an attractive
LNG price and needs of natural gas customers. The LNG terminal will balance regasification
quantities to customers through the use of Latvian Inukalns underground gas storage
capacities;
Having more favorable LNG prices that are lower than the Governments established price cap,
in accordance with requirements of the 25 percent rule, LNG terminal would supply (in
compliance with the short or long term contracts) 0.60.7 bcm of LNG for the Lithuanian
consumers.
25 percent rule
Currently, Lithuania does not have a natural gas market. Gas is bought from one supplier with fixed
terms and pricing. Natural gas supply contracts are concluded exclusively for long-term in such way
binding to the sole external supplier without leaving any options for an alternative. Therefore:
as LNG infrastructure is created, it is also necessary to create regulatory environment that
allows access to the global natural gas market opportunities;
to promote the efficient competitiveness of natural gas supply sources and to ensure LNG
terminals activity (i.e., LNG terminal technological capacity needed to continuously and
effectively meet the country's natural gas demand), imported natural gas quantity through the
LNG terminal must be at least 25 percent of total consumption of natural gas in the Republic of
Lithuania per year;
the 25 percent rule, in order to ensure competitive equality, will be applied equally both to the
gas, supplied through the LNG terminal and through the pipelines;
22
25 percent rule shall prevent the current monopolist from concluding long-term contracts with
suppliers and delaying of gas market introduction into the country;
in order to protect the interests of gas consumers in Lithuania, the Government of the Republic
of Lithuania established a price cap of through the LNG terminal and pipelines imported and in
the internal market of Republic of Lithuania consumed natural gas;
when suppliers will get used to the new opportunities opened by LNG terminal and gas market
is fully developed, the 25 percent rule will be withdrawn.
Currently Gazprom supplies all Lithuanian consumers with natural gas and in many cases has a longterm gas supply contracts. The largest gas user SC Achema has entered into a direct long-term contract
with OAO Gazprom. In order to maintain influence in the Lithuanian market, OAO Gazprom in the
short term can provide attractive offers to the major customers, and thereby prevent the LNG terminal
from entering the market.
Temporary mandatory 25 percent natural gas supply regulation through the LNG terminal (accordingly
25 percent binding supply mechanism would be also for the gas supplied through pipelines) would be
useful to prevent OAO Gazprom from concluding long-term contracts with suppliers, thus, eliminating
any opportunity of LNG introduction to the Lithuanian natural gas market. This would allow
consumers to have access to the LNG markets, choosing their own long-term or short-term contracts,
when it is beneficial. So, over time, when the Lithuanian consumers gain the experience to work with
LNG market opportunities and after the intensification of gas market relations, 25 percent temporary
rule will be withdrawn.
So, in order to ensure real alternative to natural gas supply, the Government of the Republic of
Lithuania on 29 February 2012 adopted a resolution no. 219 which approved minimal import quota
through LNG terminal of 25 percent from volume of annual domestic natural gas consumption for
natural gas suppliers in Lithuania.
On 12 June 2012 the Parliament of Lithuania adopted LNG Law. It states the general principles and
requirements for construction of LNG terminal in the territory of the Republic of Lithuania. Its
activities and operation are set forth at the highest legal level, as well as legal, financial and
organizational conditions for implementation of LNG terminal project have been created..
Business regulation
As well as infrastructure activities, LNG import and trading activities would be regulated by laws.
Government or, on behalf of it, the National Price and Energy Control Commission (NPECC) would
determine a price cap. It would apply to through the LNG terminal imported and in the Lithuanian
domestic market consumed natural gas amount which must represent at least 25 percent of the total
consumption in the Republic of Lithuania per year. The controlling authority must also approve terms
and conditions for calculation and estimation of of the natural gas price cap.
When determining through the LNG terminal imported natural gas price cap, The Government of the
Republic of Lithuania will evaluate the optimal variant for the Republic of Lithuania, which would
result in maximum benefit to the State and natural gas consumers.
23
Project organization
The Government of the Republic of Lithuania on 21 July 2010 by Resolution No. 1097 approved that
Klaipdos Nafta can begin development of the project of liquefied natural gas terminal. Klaipdos nafta
was assigned due to the companys financial capacity to complete the preparatory works of the project
and the possibility of using the experience gained in managing the oil terminal in Klaipda.
Klaipdos Nafta is responsible for both infrastructure development for LNG as well as import and trade
business establishment.
It is planned to transfer LNG terminal activities with the assets, rights and obligations to the Statecontrolled gas transmission system operator. Klaipdos nafta could further develop LNG natural gas
import and trading activities.
Figure No. 8. Project development scheme
Besides implementation of the LNG terminal project the Company was entrusted with total project
coordination including work coordination delegated to other bodies, which also includes KSSA.
24
Implementation plan of the LNG terminal

Preparatory works of the LNG terminal:
On 30 June 2011 an agreement was signed with a leading adviser Fluor, which is involved in
the overall project implementation and will provide technical-engineering services, permit
procurement assurance services, project implementation and management services; LNG
market and supply, business and financial advisory services.
The project was structured, concept of the project was prepared and key parameters were
validated.
On 16 December 2011 assessment reports of the development plan and strategic environmental
impact assessment (SEIA) were prepared and approved. These confirm that the LNG terminal
project complies with the provisions of National Energy Strategy. Performed SEIA confirms
that the project is feasible to implement in Klaipda Seaport.
Strategy of LNG supply and natural gas sale was prepared and presented.
Study of navigation and mooring of FSRU and LNG carrier was completed.
List of key tasks completed related to LNG terminal:
26 April 2012
Marine and Pipeline FEED completed.
May-September
2012
Navigational analysis of LNG ships was completed and navigational

parameters of LNG ships in Klaipeda Port were determined, on the basis of
which Klaipeda State Seaport Authority shall execute amendments of
Navigation rules.
May 2012
LNG terminal project business plan was presented.
12 June 2012
Law on Liquefied Natural Gas Terminal was enacted by the Parlament.
JuneAugust 2012
Geological investigation for construction of LNG jetty and pipeline in the

Port.
3 July 2012
Procurement for Natural Gas Pipeline System Engineering, Procurement

and Construction (EPC) works was announced. On 21 December 2012 the
winner of the tender was announced.
5 July 2012
Signed a General Bilateral Cooperation agreement with Klaipeda State

Seaport Authority on construction of jetty of LNG terminal and dredging
works of Port water area.
14 August 2012
AB Klaipdos nafta and Klaipeda State Seaport Authority signed an

additional agreement to General Bilateral Agreement on rules and
conditions of investment and compensation of investement.
25
24 August 2012
Procurement of LNG terminal project port Infrastructure (jetty) with

suprastructure (equipment) engineering and construction works was
announced. On 10 December 2012 initial tender offers were received and
negotiations with tender participans started.
12 September 2012
A request was submitted to the Ministry of Energy of the Republic of

Lithuania to address the Ministry of Finances of the Republic of Lithuania
to include a State guarantee limit of LTL 200 million, intended for security
of loans for investment into LNG terminal infrastructure, into the State
budget of 2013. On 20 December 2012 the Law of Approval of Financial
Indicators of State Budget and Municipalities Budget was adopted which
included the requested State guarantee limit.
September 2012
Land property for construction of gas metering station (GMS) was

purchased.
October 2012
LNG terminal Safety Report, version 1, was prepared which will be

supplemented with solutions of basic design and will be submitted to
authorities for approval.
12 October 2012
Klaipeda State Seaport Authority announced procurement of port dredging

works. On 21 December 2012 final tender offers were received.
22 October 2012
Regional Environmental Protection Department of Klaipda by the

Ministry of Environment of the Republic of Lithuania has granted
development consent on construction and activities of LNG terminal and
Related Objects of Infrastructure in the southern part of Klaipda State
Seaport nearby Pigs back Island. The consent finalised the procedure of
environmental impact assessment on LNG terminal project.
October 2012
AB Klaipdos nafta and AB Lietuvos dujos signed an agreement on

installation of tie-in point for connection of LNG terminal to transmission
grid.
November 2012
Main terms and conditions for connection of LNG terminal to transmission

grid of AB Lietuvos dujos were approved.
9 November 2012
Procurement of Overdraft facilities was announced. On 21 December 2012

initial tender offers were received.
9 November 2012
Procurement of financial services (long term loan and performance

guarantee) was announced. On 13 December 2012 applications of the
suppliers were received.
23 November 2012
Following the order of the European Commission, analysis of LNG supply

26
to the Baltic region was prepared. It indicated that Lithuania selected the
best technological solution which corresponds to regional LNG terminal
parameters with the lowest costs of the terminal construction and operation,
in comparison to potential terminals of Latvia, Estonia and Finland.
December 2012
Concept of special plan of LNG terminal construction and SEIA was

approved.
December 2012
Process of detailed planning regarding land property for GMS was started.
December 2012
A feasibility study was completed titled Analysis of quality changes of

natural gas and estimation of suitable parameters for consumers in
transmission system operated by SC Lietuvos Dujos.
17 December 2012
Established and registered a new subsidiary LITGAS UAB, which will

engage in trade of LNG and supply of natural gas.
19 December 2012
Comfort letter regarding LNG terminal project was signed by the Minister
of Energy.
Planned LNG terminal works for 2013-2014:

To complete process of territory planning for LNG terminal infrastructure (special plan,
detailed plan and land servitudes) 3rd quarter 2013;
To finalize negotiations with LNG suppliers and to sign long-term LNG supply agreement - 1st
quarter 2013;
To sign LNG sale agreements and to ensure sales of purchased LNG, in compliance with Rules
for Diversification of the Natural Gas Supply 1st and 2nd quarters 2013;
Permission for construction works and approval for basic and detail designs of LNG terminal
pipeline and jetty 3rd quarter 2013;
To start preparatory construction works and to start construction of LNG terminal jetty and
pipeline 3rd quarter 2013;
To complete construction of LNG terminal infrastructure 3rd quarter 2014;
Arrival of FSRU, connection to gas pipeline and preparation for operation 4th quarter 2014;
Commissioning and start-up works in Klaipda Seaport 3rd quarter 2014;
To start LNG terminal operation in December 2014.
27
Figure No. 9. LNG terminal project implementation plan

LNG Terminal
launch
2011
Q1
Q2
Q3
2012
Q4
Q1
Q2
FSRU lease
agreement
FSRU
2013
Q3
Q4
Q1
Q2
2014
Q3
Q4
Q1
Q2
Q3
2015
Q4
Q1
Construction of FSRU and delivery to the Port of Klaipda
Port dredging by Port of Klaipda

Pre-project study
Jetty
Pre-project study
Gas pipelines
Jetty EPC
tender
Design and onstruction of jetty (EPC)

by Port of Klaipda and Klaipdos nafta
Pipeline EPC
tender
Design and connection LNG Terminal to

the gas grid (EPC)
Construction of gas main Jurbarkas Klaipda

by Lietuvos dujos
Environmental Impact
Assessment (EIA)
Process items
Territory planning and

construction permit
Preparation of Project financing
structure and loan procurement
Project financing
State
guarantee
Arrangement of LNG supply
Gas trading
Arrangement of NG
sales
Legal environment
assurance
Law on LNG
Terminal
Finished
Testing and
commissioning works
Rules on gas
supply
diversification
In progress
List of major legal acts governing the LNG terminal:

Date
Legal Act
15 February Resolution by the Government of the
Republic of Lithuania On Construction of
2012
Liquefied Natural Gas Terminal (State
Gazette, 2012, No 25-1166, No 83-4387)
29 February
2012
Resolution by the Government of the

Republic of Lithuania On Ensurance of
Obligatory Activity of Liquefied Natural
Gas Terminal (State Gazette, 2012, No 291297).
26 June 2012
Resolution by the Parliament of the

Republic of Lithuania On Adoption of the
National Energy Independence Strategy
(State Gazette, 2012, No 80-4149).
Performed by third
parties
Impact on LNGT project

The Government approved that
Klaipdos Nafta would continue the
implementation of the LNG terminal
project in the Republic of Lithuania.
The Government approved minimal
import quota through LNG terminal
of 25 percent from volume of annual
domestic natural gas consumption
for natural gas suppliers in
Lithuania.
LNG terminal project is the strategic
priority project intended to ensure
stability and diversification of
natural gas supply, to reduce natural
28
Date
12 June 2012
16 October
2012
22 October
2012
7 November
2012
6 November
2012
Legal Act
Impact on LNGT project

gas prices, and to create natural gas
market.
Law on Liquefied Natural Gas Terminal General principles and requirements
for construction of LNG terminal in
the territory of the Republic of
Lithuania, its activities and
operation are set forth at the highest
legal level, as well as legal, financial
and organizational conditions for
implementation of LNG terminal
project have been created.
Obligatory requirements applied to
Republic of Lithuania On Adoption of the
procurement of LNG which is
Procedure for Procurement of Liquefied
delivered to LNG terminal. General
Natural Gas Delivered to the Liquefied
requirements of public procurement
Natural Gas Terminal (State Gazette, 2012, are not applied to LNG
No 122-6151).
procurement.
Resolution by Klaipeda Region
Resolution granted consent on
Environmental Protection Department of the construction and activities of LNG
Ministry of Environment of the Republic of Import Terminal and related
Lithuania No (4)-LV4-3270.
infrastructure.
Procedures were set on
Republic of Lithuania On Approval of the
implementation of rules of
Rules of Diversification of the Natural Gas
diversification of syupply of natural
Supply (State Gazette, 2012, No 132gas imported and consumed in
6708).
internal market of the Republic of
Lithuania, including requirements
for practical implementation of 25
percent rule (obligatory requirement
for natural gas suppliers to ensure
import of natural gas through LNG
terminal).
Amendments by the Parliament of the
Amendments allow changing land
Republic of Lithuania on Forest Law No Iuse purpose from forest land into
671
land of other usage, when it is set
forth in special plans of projects of
extraordinary state importance.
29
Changes of regulatory environment during the project implementation:

Date
Legal Act
Impact on LNGT Project
Resolution by The National Control
NCC approved calculation
28
Commission for Prices and Energy (NCC)
methodology and inclusion of costs
September
on Amendment of methodology for
of construction of LNG terminal
2012
calculation of cap prices for transmission
into the price (tariff) of transmission
and distribution of natural gas
of natural gas in the form of LNG
terminal premium.
Resolution by the NCC On Adoption of
NCC determined rules of
9 October
Rules on Administration of the Funds
administration of the funds collected
2012
Allocated for Full or Partial Compensation
through natural gas transmission
of Costs of Construction and Operation of
tariff and required for compensation
the Liquefied Natural Gas Terminal (State of costs of construction and
Gazette, 2012, No 118-5973).
operation of the LNG terminal.
Resolution by the NCC On Approval of the NCC decided to compensate part of
19 October
Funds for the Year 2013 for Full or Partial
costs of construction of LNG
2012
Compensation of Costs of Construction and terminal for 2013 equal to LTL
Operation of the LNG Terminal (State
113,798. This amount will be
Gazette, 2012, No 123-6229).
included into price of natural gas
transmission service as LNG
terminal premium.
Resolution by the NCC On Correction of
NCC approved LNG terminal
26 October
the Cap Prices for Transmission and
premium supplementary and
2012
Distribution of Natural Gas by Lietuvos
integral constituent in the cap price
Dujos AB and Approval of the
of transmission of natural gas, for
Supplementary and Integral Constituent
compensation of costs of LNG
(Costs for the LNG Terminal) in the Cap
terminal construction in 2013 which
Price for Transmission of Natural Gas for
amounts to LTL 37.53 for 1000 m3
the Year 2013 (State Gazette, 2012, No
(excl. VAT).
126-6375).
NCC approved requirements for
21 December Resolution by the NCC On Approval of
Requirements for Rules of Use of the LNG
rules of use of LNG terminal.
2012
terminal (State Gazette, 2012, No 154Klaipdos Nafta has prepared and
7972).
approved these rules on 31 January
2013.
30
Project funding
Need of funds for start-up of the LNG terminal business
During the project implementation, the largest investments are as follows:
Lease (acquisition) of the floating LNG storage with a regasification facility;
Harbor dredging, jetty construction and preparation of jetty facilities;
Construction of the pipeline linking the terminal with the gas-main;
Preparatory design, obtaining permits, project management and
other
works;
Total investment demand before the start-up of the LNG terminal is about LTL 613 million..
FSRUwith a regasification facility is the largest investment of the project. It will be leased, eliminating
the need for additional funds from financial institutions or the State budget. According to the
agreement, the lessor of FSRU will take on infrastructure operations risks and provide supervision
services. This is especially important for Lithuania, which does not have that type of equipment
maintenance experience.
.
Below is a comparison of contract terms of similar transactions concluded in recent years.
31
Figure No. 11. Prices for a lease of FSRUs on the market
Until the start-up of the LNG terminal at the end of 2014, Klaipdos Nafta will perform preparatory
works: project organization and obtaining the necessary permits, LNG terminal connection with the
gas-main, construction of jetty facilities and start-up works (total LTL 453 million). Start-up works
include testing of LNG terminal infrastructure which will require first supply of LNG amounting to
LTL 120 million. Most likely part of costs will be recovered on sale of used LNG, however for
purposes of simplification, it is assumed no costs will be recovered.
Table No. 4. Klaipdos nafta investments for the LNG terminal project
Klaipdos Nafta investments*, LTL million
1. Project management and infrastructure testing (incl. cost
of LNG for testing purposes)
2. LNG terminal gas pipeline and gas metering station
design and construction
3. LNG terminal jetty suprastructure design and construction
Total:
2012
2013
2014
Total
30
78
116
224
53
88
141
29
59
88
30
160
263
453
Source: project FEED prepared by the lead advisor Fluor
Jetty infrastructure construction and harbor dredging works are entrusted1 to Klaipda State Seaport
Authority, which is required to adapt existing and build new infrastructure objects in Klaipda harbor
(total funds needed LTL 160 million). KSSA will finance their investments from own and borrowed
funds.
2012-02-15 Resolution of The Government of Lithuania on LNG Terminal Construction
32
Financing capability of the LNG terminal by Klaipdos nafta

In order to compensate the said investments, the Company is going to raise funds from the following
sources:
a) about LTL 250 million would be funds borrowed from Lithuanian and/or international financial
institutions (international financial institutions require State guarantee);
b) about LTL 200 million would be natural gas consumers funds, i.e. revenue from the additional
and integral component to the upper limit of the natural gas transmission price (the LNG
terminal extra) in 2013 and in 2014 (the LNG terminal extra funds collected from gas
transmission tariff in 2013 would amount to LTL 113,798 thousand).
The National Control Commission for Prices and Energy (hereinafter, the Commission, NPECC) in
its meeting of 19 October 2012 approved a draft of the investments planned by the Company into the
liquefied natural gas terminal, installation of its infrastructure and connection. Preliminarily, by 2015
these investments will amount to approximately LTL 453 million.
The Company will also secure LTL 120 million overdraft facility for cashflow management purposes
until long-term financing is secured in relation to the fact that cash inflow from LNG terminal premium
will come after 5 months from the relative investment period.
Besides, the Company is going to address commercial banks for: (1) a bank guarantee2 in the amount of
$ 50 million intended for securing the performance of the contract for the lease of the FSRU, (2) a bank
guarantee intended for securing the performance of the gas supply contract, (3) a bank loan intended
for formation of the working capital necessary for gas purchasing.
The financial resources of the Company during the project period could amount to about LTL 100
million. The Company could allocate these funds towards financing the gas trading activities through
LNG terminal.
Also, seeking to secure proper performance of possible financial obligations to financial institutions,
the Company has submitted an application to the Ministry of Energy of the Republic of Lithuania,
asking it to address the Ministry of Finance of the Republic of Lithuania for including a limit of State
guarantee intended for financing loans for investments into the LNG terminal infrastructure (LTL 200
million), into the draft Law of the Republic of Lithuania on Approval of the Financial Indicators of the
State Budget and Municipal Budgets for 2013. The requested limit was included into State Budget of
2013.
The Company notes that all the data given in this notification are preliminary and planned, but not yet
final, and may change during the implementation of the project (if the project will be implementable).
According to 2012-03-02 agreement between Klaipdos Nafta and Hoegh LNG on acquisition of LNG FSRU
33
Table No. 5. LNG terminal project financing scheme

AB Klaipdos nafta (KN)
LNG Terminal Trading Activities
LNG Terminal Infrastructure

Demand for
financing and
guarantees
$US 50 M
guarantee for the
FSRU operating
lease
Potential
resources
Collateral
$US 50 M
Accounts
receivable from gas
tariff (from 2015)
commercial bank
guarantee
250m LTL
450m LTL
Investments in:
Project
management
Loan from an
institutional
(NIB, EIB, EBRD)
or commercial
bank
(for 20-25 years)
Gas pipelines
200m LTL
Jetty facilities
compensation of
investments via
gas tariff
LNG Terminal
tangible assets
Demand for
financing and
guarantees
Potential
resources
bank guarantee for

gas supply
guarantee from a
commercial bank
200m LTL State

guarantee
Collateral
KN guarantee/ oil
terminal assets
and cash flows
LNG Terminal
trade accounts
receivable and
inventories
Guarantees from
key buyers
investment in
Working Capital
(FY2013-2014)
Approved.
credit facility from a

commercial bank
Guarantees from
export credit
agencies
100m LTL
KN cash
investment
Financing of the LNG terminal business (from 2015)

Selected purchase method of the Floating Storage and Reregasification Unit (FSRU) is an operating
lease agreement with a purchase option after 10 years (2025) to purchase for its residual value , set in
the time charterer party agreement.
FSRU operating lease costs and other fixed LNG terminal operation costs will be financed from the
natural gas tariff, controlled by the NPECC. The redemption amount of the FSRU will be financed by
financial institutions as the LNG terminal operator would have an established track record of operation
which would allow borrowing the required amount by plegung the FSRU.
34
Figure No. 12. LNG terminal income / expenses (mln. LTL)

Income
LNG terminal income / expenses (mln. LTL)
Redeemed
FSRU
Completely
acquired FSRU
Lease of FSRU
Lease of servicing
Other costs (fuel, deterioration)
Operating costs of FSRU
LNG import and trade financing activities

The gas trading company and its profit will bee regulated by the State Price and Energy Control
Commission, setting fixed income margins. LNG supply revenues and expenses will directly depend on
LNG import volume. The main financing need for the LNG trading company will be necessary
guarantees to LNG suppliers as well as financing of working capital. It is planned that the LNG trading
company will be able to pledge purchased LNG resources and accounts receivable from sales of LNG
to satisfy its financial needs.
35
Cost and benefit analysis of the LNG

terminal
36
Ensurance of alternative gas supply to Lithuania

Oil, oil products and natural gas in equal proportions amount to 70 percent of total primary energy
resources consumed in the country. Unfortunately, no alternative gas supply channel was established
over Lithuanias independence period. The oil terminal Btings Nafta is a very good example of how
the State can solve the supply security issue, and the relevance of the alternative source of supply,
when supply by the main channel is interrupted.
It is expected that natural gas at least 20 years will be among the main primary energy sources. In 2020
consumption of natural gas will amount to 1.63.7 billion cubic meters (further bcm) per year.
Source: Department of Statistics, LEI
It is forecasted that to meet the demand of the first necessity in 2020 will require 0.91.5 bcm of gas.
Demand of the first necessity involves supply of gas to domestic consumers, heat production, public
institutions, and companies, for which loss of supply of gas would mean the suspension of activities.
The largest gas supplier in Lithuania is SC Lietuvos dujos which on 16 December 1999 entered into an
agreement with OAO Gazprom valid until 31 December 2015 to supply natural gas to the Republic of
Lithuania. SC Lietuvos dujos sells natural gas to both domestic and non-household customers, and
occupies about 70 percent of retail gas market. The second largest supplier is JSC Dujotekana, which
controls the remaining 30 percent of gas supply market. It has signed a long-term gas supply contract
with OAO Gazprom until the end of 2012.
37
Ensuring competitive pricing

Lithuania is facing not only the natural gas supply problem in Lithuania imported natural gas prices
are significantly higher than in neighboring EU countries. Lithuania, buying gas from a single external
supplier and consuming just 0.6 percent of total gas extracted by OAO Gazprom, does not have a
serious negotiating position to reduce the price of gas. In 2012 imported natural gas prices compared
with the German gas import prices were on average 15 percent higher.
Figure No. 15 Gazprom prices at Lithuanian vs German boarder
Source: Regulator, Index Mundi
Theoretically, all the Baltic countries are subject to the same gas price formula, but Latvia and Estonia,
having a stronger negotiating position with OAO Gazprom (Latvia concerning Inukalns Underground
Gas Storage, Estonia concerning the availability to use local fuel shale), have better natural gas
prices. Meanwhile Lithuania, in the absence of real alternatives, pays more than its neighbors.
When implementing LNG terminal project, the following objectives will be achieved:
Provided access to the international gas markets the opportunity to purchase natural gas
for the best gas prices and to develop the gas exchange in Lithuania and the Baltic region;
Diversification of supply consumers would have the opportunity to purchase natural gas
from several alternative sources. The lack of alternative supply sources and natural gas price
linking to oil or oil products prices results in higher prices than gas prices linked to gas indexes.
A map of of gas prices in Europe is provided below for comparison.
38
Figure No. 16. Average wholesale gas prices (H1 2012)
Source: DG Ener
39
Benefits of the LNG terminal

Benefits of the LNG terminal for the State
Economic
The biggest economic benefit of the LNG terminal for the State is expected to be lower natural gas
prices for the Lithuanian people and companies. The LNG terminal can ensure a lower price in two
ways: direct import of cheaper natural gas, or acting as a negotiating leverage to lower the Russian
natural gas prices. Evaluation of the actual LNG prices for 2012, the LNG terminal benefits to
Lithuania would reach 0.4 bn. LTL per year.
To assess the economic benefits of the LNG terminal, two scenarios of natural gas supply through the
LNG terminal are compared:
1. In Lithuania LNG terminal law will be governing the mandatory use of alternative gas supply
up to 25 percent of the general national gas consumption. Adjustable minimum quantity of
LNG import would consist of up to 25 percent of the general national gas consumption in
Lithuania. LNG price used for comparison is 2012 average NBP (National Balancing Point,
UK) index price.
2. According to the planned 2014 gas grid infrastructure, the LNG terminal could supply 6 mln.
m3 per day, which is theoretically up to 2 bcm per year (2/3 of the total demand of natural gas in
Lithuania).
Calculated financial results of the possible scenarios:
A. Terminal operates at a minimum mode (25 percent = 0.75 bcm):
1. 25 percent of natural gas is imported through the LNG terminal at NBP prices;
2. 75 percent of natural gas is imported from Russia under the existing supply contract prices.
Economic benefits 150 mln. LTL/year.
Figure No. 17. Economic benefits of the LNG terminal, annual capacity 0,75 bcm/year
Lithuanian
consumption
(bcm)
Russian gas
price 2012
average
(LTL/1000 m3)
LNG price* with

transportation
and LNG
terminal costs
(LTL/1000 m3)
Lithuanian
expenditures
on gas
(bn. LTL)

3,0
1329
3,99
2,25
1329
2,99
Alternative
Imported LNG gas
0,75
Total
Ekonomic benefits (bn. LTL)
3,0
1130
0,85
3,84
0,15
*(2012 average NBP + plus transportation costs)
40
A. Terminal operates at a maximum mode within the existing gas network capacity (~2 bcm):
1. 2/3 of natural gas is imported through the LNG terminal at NBP prices;
2. 1/3 of natural gas is imported from Russia under the existing supply contract prices.
Economic benefits 400 mln. LTL/year.
Figure No. 18. Economic benefits of LNG terminal, annual capacity about 2 bcm/year
Lithuanian
consumption
(bcm)
Russian gas
price 2012
average
(LTL/1000 m3)
LNG price* with

transportation
and LNG
terminal costs
(LTL/1000 m3)
Lithuanian
expenditures
on gas
(bn. LTL)

3,0
1329
1,0
1329
Imported LNG gas
2,0
3,99
Alternative
Total
1,33
1130
3,0
Ekonomic benefits (bn. Lt)
2,26
3,59
0,40
*(2012 average NBP + plus transportation costs)
Figure No. 19. Potential economic benefits of the LNG terminal due to decreased prices for gas
Variable costs of LNG terminal mainly consist of LNG fuel used to produce liquefied natural gas
transforming them into the gaseous form (in the reregasification process).
In addition, about 1020 percent (60120 mln. LTL) of LNG project will be carried out by the
Lithuanian contractors and project-related service providers, which will boost the growth of the
Lithuanian economy.
41
Ensurance of natural gas supply security

The project of the LNG terminal will help to solve historically unfolding problem of Lithuanias
dependance from a single source of gas supply from Russia, (gas supplied from the only gas-main,
which passes through Belarus). In case of disruption of one of the natural gas supply sources
(analogous to the oil supply from pipeline Druzhba and Btings oil terminal model), Lithuania will
have access to natural gas through an alternative natural gas source in the country and ensure its
stability for the industry.
Social benefits
Implementation of project of the LNG terminal, will create a direct benefit to the city of Klaipeda: the
introduction of further 50100 work places in construction and during operation of the LNG terminal.
Benefits of the LNG terminal to consumers of natural gas

The LNG terminal will allow Lithuania to participate in global natural gas markets. In recent years, the
rapidly growing volume of LNG supply, LNG prices in the international exchanges are more attractive
than those provided in long-term supply contracts of OAO Gazprom. The ability to gain gas in the
international gas exchanges would reduce the cost of gas for consumers in Lithuania.
Lithuanias prices for natural gas purchased from OAO Gazprom are derived from the price formulas,
related to oil products, so the price of gas purchased directly correlates with global oil prices and is
constantly rising.
The natural gas pricing model has been used in Europe in 19802005, when the market was dominated
by long-term gas supply contracts (twenty years or more) and almost no alternatives were present. In
addition, until 2002 oil prices were relatively stable (compared to the period after 2002). It met both the
natural gas suppliers, as well as natural gas consumers.
Due to the rising prices of oil and oil products, gas delivered under long-term oil-related contracts
became uncompetitive in the market, which appeared as an alternative supply of natural gas in the LNG
form. Over the past 5 years LNG global trade has increased by about two-times.
Along with LNG, development of natural gas spot market transactions began to take shape in the
sector. Spot pricing models were developed according to demand-supply principle when price is set in
the short period under the prevailing market prices.
During the past decade, natural gas exchanges were formed (NBP, TTF, Zeebrugge, Henry Hub),
which trade both in LNG and piped gas, and they have formed significantly lower natural gas prices
than piped natural gas prices.
42
Picture No. 20. Prices of import and gas markets indexes (2010-2012 LTL/1000 m3)
Source: Index Mundi, gas markets
Further growth in crude oil and oil product prices, according to the pricing principles applied by OAO
Gazprom, in natural gas valuation (i.e. linking with the prices of oil products) is not cost-effective
alternative to Lithuania.
Henry Hub is the index of natural gas trading in the USA. Discovery of shale gas resources and
technology of their extraction reduced natural gas prices in the USA, as shown in the picture above.
USA is implementing LNG terminal construction projects which will allow it to export liquefied
natural gas to Europe and other continents.
If it would be possibile to buy gas from Great Britain (NBP index), Netherlands (TTF) or USA (Henry
Hub) markets, or buy long-term contracts, where natural gas price is linked to the stock exchange
prices, natural gas prices in Lithuania could fall by 20 percent or more.
Figure No. 21. Tentative price of gas import
Source: Index Mundi, gas markets
43
LNG terminal benefits to the company implementing the project

The Government of the Republic of Lithuania on 21 July 2010 by Resolution No. 1097 on the Natural
Gas Terminal Development agreed that the company Klaipdos nafta will begin to develop liquefied
natural gas terminal project. Klaipdos nafta, implementing the LNG terminal project receives:
the possibility to diversify activities;
by investing in profitable project, ensure long-term returns to shareholders.
LNG terminal project is recognized as important to the State and thus it facilitates the development of
the project:
The National energy strategy approved by the Seimas of the Republic of Lithuania on 26 June
2012 Resolution No. XI-2133 and on 18 January 2007 Resolution No. X-1046.
On 25 February 2009 LNG terminal project approved by the Government in the Programme for
20082012.
On 23 June 2010 an interdepartmental working group was established, which drew up proposals
for the LNG terminal construction site, technology, and possible funding solutions.
On 21 July 2010 the Government of Lithuania adopted resolution on LNG Terminal Project
Development which states that Klaipdos Nafta will start implementing LNG terminal project.
General Meeting of of Shareholders of Klaipdos nafta (72.32 percent of the Company shares
are owned by the Lithuanian Ministry of Energy) on 26 August 2010 agreed to carry out
preparatory work on the project and implement an investment project for construction of the
LNG terminal.
On 11 May 2011 interdepartmental government commission was established headed by the
Prime Minister for the LNG terminal project implementation supervision.
By the Government Resolution No. 871 of 13 July 2011, LNG terminal project is recognized as
a major economic project of the State.
The Government of the Republic of Lithuania adopted Resolution No. 175 of 7 February 2012
on the Government of the Republic of Lithuania on 27 December 2007 No. 1442 Resolution of
the National Energy Strategy Implementation Plan for 20082012 supplement, by which
liquefied natural gas (further LNG) terminal project has been included in the National Energy
Strategy Implementation Plan of 20082012 and further to be approved for 2012-2016.
The Government of the Republic of Lithuania adopted Resolution Nr. 199 on 15 February 2012
on Liquefied Natural Gas Terminal Construction supporing the Company plans to continue
LNG terminal project. The Government Resolution instructed the Ministry of Energy to initiate
the General Meeting of Shareholders for amendment of the Companys Articles of Association
that one of the Companys objectives would be the LNG terminal construction and
commissioning, cost effective and efficient operation of the LNG terminal and (or) its
subsequent transfer to the Republic of Lithuania controlled natural gas transmission system
operator.
Law on Liquefied Natural Gas terminal of the Republic of Lithuania approved on 12 June 2012
No XI-2053.
44
On 26 June 2012 the Parliament of the Republic of Lithuania passed resolution on Adoption of
the National Energy Independence Strategy which sets main Lithuanian energy sector aims and
their implementation measures until 2020 as well as development guidelines until 2030 and
2050. LNG terminal project was established as the strategic priority project intended to ensure
stability and diversification of natural gas supply and to reduce natural gas prices as well as
create natural gas market.
LNG terminal and LNG supply activity will be regulated by the State, so the Company will be provided
with a stable income.
LNG supply market review

Natural gas currently is the fastest-developing energy resource. Natural gas demand growth is
determined by several factors. First, natural gas is friendlier to environment fuel than oil. Second,
natural gas supply is more stable. Third, the application of natural gas liquefaction technology has
become economically attractive for transportation of natural gas from regions where huge gas reserves
were discovered and export of which has not been implemented due to lack of pipeline infrastructure,
During the past five years, global LNG trade increased about two times, significantly increasing
number of market participants, LNG trading is carried out around the world. Top LNG gas demand is
in Asia-Pacific Ocean region, where it is consumed about 60 percent of all produced LNG (2010). The
largest LNG exporter Qatar, in 2010 exported about 79 bcm of LNG.
Figure No. 22. Changes in LNG flow
Source: EconGas
Because of its advantages (fast, flexible, independent from the surrounding countries), LNG import and
export infrastructure is being developed rapidly. Currently, around the world, more than 46 export and
45 import terminal projects are being carried out. As a result, the LNG market continues to grow
rapidly.
Meanwhile, ground pipeline projects while in development, are mostly in internal markets. Crossborder gas pipeline projects are often subject to political risks and are usualy delayed (i.e. Nabucco,
South Stream).
45
Supply-demand balance
Currently LNG demand exceeds supply. This was mostly influenced by the increased flows to Asia,
caused by several factors: the natural gas consumption growth in the Indian and Chinese markets (these
markets are limited in the gas pipeline infrastructure), Japans fuel balance changes after the incident in
Fukushima (closed nuclear power plants, nuclear energy was replaced by natural gas). Currently,
Japans consumption consists of over 40 percent of all Asia LNG demand.
However, the situation will return to normal after new gas liquefaction terminals are built:
It is planned that in 2015 Australian export capacity will exceed 80 bcm. Australia will be able
to meet growing Asian demand and LNG supply trends will be redistributed positively to the
European region.
Due to effective shale gas extraction technology USA is planning to replace existing import
terminals with export. USA is planning that terminal capacity will exceed 100 bcm. This change
will have a direct impact on trade in the Atlantic basin and is likely to reduce LNG prices.
Currently, USA prices (Henry Hub) are the lowest LNG prices in the world.
In the 510 year term, new gas liquefaction terminals are planned in Africa, Canada, USA and
Russia. After the launch of all planned gas liquefaction terminals, LNG supply will jump to 535
bcm/year (from the current 251 (88 percent).
Therefore, long-term projections indicate that supply will exceed demand and may reduce the prices of
LNG.
Figure No. 23. Projection of natural gas distributrion for 20122020 years
Source: Poten&Partners
46
LNG pricing
LNG global market pricing system is not uniform. LNG prices reflect the countrys consumer or
regional market situation. In the Atlantic, Caribbean and European markets LNG price is usually
associated with the Brent oil price or partly with oil products (gasoline, fuel oil) prices. In recent years,
more often contracts of natural gas supply are concluded applying price formula linked to the gas
indexes.
Figure 24. Differences in the LNG prices according to the region
Source: FERC, Regulator
The gas indexes are formed in the gas exchange centers (hub). The main gas exchange centers, which
could be used to link gas supply price for Lithuania:
NBP (National Balancing Point called) Great Britain
TTF (Title Transfer Facility) Netherlands
HH (Henry Hub USA)
An important factor is transportation costs in the LNG supply price formula. Depending on the country
or transshipment terminal, from which LNG is supplied, transportation costs can vary up to two times.
47
Table No. 6. LNG transportation costs, LTL/1000 m3

Transportation cost
Central Asia
Greece (Revithoussa)
Italy (Rovigo)
Spain (Huelva)
Portugal (Sines)
Holland (Roterdamas)
Belgium (Zeebruge)
France (Montoir)
Great Britain (Isle of Grain)
USA (Cove Point)
USA (Sabine Pass)
149
170
192
196
227
227
217
227
291
330
North
Ameriva
51
56
26
29
59
59
50
59
122
158
Nigeria
155
161
111
111
141
141
131
140
166
192
The Fsr
East
224
245
268
272
302
302
293
302
368
378
Trinidad
158
163
112
110
131
131
123
130
69
78
North Eats
Asia
310
331
354
359
392
392
380
391
456
537
LTL/1000 m3
North
Australia
Europe
239
133
259
139
285
89
289
85
321
54
321
54
308
69
321
54
383
127
487
173
Source: Icis Heren
LNG use for ship fuel (bunkering) the additional activity

Starting from 2015 due to stricter environmental requirements, ships in the Baltic and North Seas have
to use low sulfur fuel. One of the alternative fuel will be LNG containing no sulfur combinations.
Establishing LNG terminal bunkering business is considered a commercially attractive activity
designed to ensure a stable income.
Guiding principles of bunkering: LNG terminal in Klaipda harbor fills up smaller bunkering vessels
(size up to 20,000 m3), which can fill a ship with LNG fuel and service smaller LNG terminals in the
Baltic countries.
Starting from 2015 in Klaipda harbor ships could be offered a supply of 66,000 tons of sulfur free fuel
a year, which amounts to 140,000 m3 of LNG that would increase the utilisation of the LNG terminal
about 10 percent.
Small LNG tanks can be installed near ports or electric or gas distribution stations. Such LNG
containers can be serviced according to the diagram below. Small LNG storages are from 10 000 m3 to
40,000 m3 of natural gas capacity, accordingly, they can accommodate from 6 mln. m3 to 24 mln. m3.
Start of usage of LNG in the Baltic countries, gives possibility to replace backup fuels (fuel oil or shale
oil) with cleaner LNG fuel. LNG creogenic container with a volume of 10,000 m3, could supply
Vilnius boiler (50 MW) with gas up to 50 days.
48
Possibilities of cooperation with Latvia and Estonia

The problem of gas supply security is of interest not only to Lithuania but also to other Baltic states.
Together with Latvia and Estonia, all three countries are not connected to the gas infrastructure and
form the so-called energy island in which the total annual consumption reaches 5.9 bcm per year.
Latvia has a limited natural gas supply security due to Inukalns underground gas storage facility in the
central territory of Latvia, and Estonia as an alternative could use domestically excavated shale.
Lithuania, however, in this respect is the most vulnerable.
One obvious area where Lithuania could cooperate with Latvia is Inukalns underground natural gas
storage in Latvia. In the event of a favorable situation in the global gas markets, LNG could be
purchased at low prices, stored in Inukalns and used when needed. Thus, the Lithuanian LNG terminal
would acquire operational flexibility and would allow even better use of the international market
opportunities.
In order LNG terminal in Lithuania to become a regional project, the general consensus of the Baltic
states is necessary. If in Lithuania, Latvia and Estonia gas-main system development was completed,
LNG terminal in Klaipda as an alternative source would ensure gas supply to all three Baltic
countries.
Figure No. 25. Scheme of regional ensurance of natural gas supply
49
SWOT analysis
Table No. 7. SWOT analysis
Strengths
The selected flexible technical solution min/max
regasification from 1.5 to 11 mln. m3/day,
respectively, from 0.6 to 4 bcm/year.
Purchased FSRU is one of the most economical of
this type of facility: 170 thousand m3 tanks, the latest
LNG vapor collection equipment (to 0.12 percent,
older ship losses up to 0.2 percent), and combined
open-loop evaporation system that enables to save
fuel, installed boiler economizers additionally recover
heat energy from exhaust gases.
Technology (FSRU) is mobile and can change
location, if necessary.
Technology (FSRU) allows use of a FSRU as a tanker.
Sufficient expertise and financial resources to
implement LNG project.
LNG terminal increases the reliability of gas supply
system due to an additional source of supply.
In 2014 with future pipeline capacity it will ensure the
needs of gas consumers even after the termination of
gas supply from Russia.
Weaknesses
Gas pipeline constraints: existing gas pipe
network 1 mln. m3/day, 0.5 bcm/year. After
construction of gas-main Jurbarkas - Klaipda
6 mln. m3/day, 2 bcm/year, insufficient
amounts for 100 percent coverage of the
Lithuanian needs.
Technical and commercial restrictions: strict
LNG supply conditions, also technological
regasification minimum of 1.5 mln. m3/day
does not allow rapid response to changes in
demand.
There are restrictions on trade of LNG minimum long-term LNG supply contract is
0.6 bcm/year, purchasing a lower amount
would increase price per m3.
Limited opportunities for gas storage in the
LNG terrminal due to the constant
evaporation. During a year of absence of
operations LNG evaporation would reach
100,000 m3 LNG amounting to 6070 mln.
LTL.
Lithuania does not have gas balancing
possibilities, a solution would be to develop
an underground natural gas storage facility.
Opportunities
In the instance of oversupply in the world markets
there are opportunities to benefit from low-cost shortterm gas contracts.
The availability of gas contracts with prices not linked
to oil indexes.
Availability to create a natural gas exchange.
Opportunities to supply LNG to LV and EE markets.
Global LNG and NG market trends, emerging from a
separate gas oil market (NBP, TTF, Henry Hub) create
opportunities for LNG market prices to have imapct on
lower NG price compared to the NG price supplied by
OAO Gazprom in Lithuania.
Utilize the regional NG storage in Iniukalns (LV) and
solving of supply and demand schedules discrepancies
due to seasonality and using the opportunity to obtain
more LNG for better prices in summer, i.e., balancing
the supply of NG.
Opportunity of development of the regional LT-LVEE LNG terminal in the ice-free port of Klaipda.
Development of the LNG bunkering/gas-station
network, as LNG is attributed to clean fuels.
Threats
In order to establish a long-term supply
contract it is required to plan and coordinate
contracts for the LNG tankers ~ 2 years before
delivery commences.
The gas transfer system is currently controlled
by market monopolist, the risk of technical
restrictions for trading exists.
OAO Gazprom has nearly unlimited financial
and technological possibilities to offer better
supply conditions and prices for competition
with the LNG terminal.
OAO Gazprom is a single external supplier
dominant in NG markets in Lithuania, Latvia
and Estonia.
Weak gas pipeline system in Latvia.
It is necessary to modernize Inukalns
underground gas storage facility for it to be
able in spring to supply gas to Lithuania.
50

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LIQUEFIED NATURAL GAS (LNG) Terminal

The main aims raised to the LNG terminal project are:

LNG price* with

The current situation

By OAO Gazprom imported gas

Imported LNG gas

Ekonomic benefits (bn. Lt)

*(2011 average NBP + transportation costs)

design and construction

LNG Terminal Trading Activities

LNG Terminal Infrastructure

bank guarantee for

200m LTL State

credit facility from a

Project investments are going to be finaced from the following sources:

Construction of FSRU and delivery to the Port of Klaipda

Port dredging by Port of Klaipda

Design and onstruction of jetty (EPC)

Design and connection LNG Terminal to

Construction of gas main Jurbarkas Klaipda

Territory planning and

LNG terminal project

LNG terminal technology and infrastructure

High pressure gas pipelines

Floating Storage and

LNG storage capacity:

Offshore jetty facility

18 km long and 700 mm wide

Figure No. 1b. The LNG terminal project location

A. FSRU with a regasification facility

Manufacturer of the FSRU Hyundai

FSRU is designed to operate at the following scenarios:

Figure No. 3. LNG transportation costs (in millions of LTL)

Source: Hoegh Ltd.

The main parameters of the ship

Increased volume of liquefied natural gas storage with a regasification facility

The maximum capacity is 4 bcm of natural gas per year.

The newly built

More efficient work, durability, and less pollution to the environment:

LTL lower costs every year);

Construction works of FSRU in the

Since the moment of purchase of the

During 10-year lease period, all risks

Lithuania does not have the

Hoegh has its own specialists which

Lithuania does not have the

Hoegh leased FSRU will be staffed

Until the end of 2014, for the

Hoegh Ltd. has a contract with a

B. Required changes to the harbor infrastructure

C. LNG terminal connection with the gas-main

Capacity of the LNG terminal

Source: Department of Statistics

Ensuring of the first necessity supply

Source: Department of Statistics

LNG terminal and marketing business model

Figure No. 7a. Business model of the LNG terminal

LNG import and marketing business model

LNG supply assurance

Implementation plan of the LNG terminal

Marine and Pipeline FEED completed.

Navigational analysis of LNG ships was completed and navigational

LNG terminal project business plan was presented.