Klaipedos Nafta AB - Notification on material event

Seimas Approved the Law on Amendment of the Law on Liquefied Natural Gas Terminal

On 27 June 2013 Seimas of the Republic of Lithuania approved the Law on
Amendment to Articles 5, 10 and 11 of the Law on Liquefied Natural Gas Terminal
of the Republic of Lithuania (hereinafter, the Law). 

The Law, inter alia, amends the regulation of trade of natural gas brought
through the Liquefied Natural Gas (hereinafter, LNG) Terminal, i.e.: 

  1. The Law abolishes the requirement for the natural gas companies importing
     natural gas to the Republic of Lithuania through the cross-border
     interconnection and other natural gas pipelines of transmission system to
     acquire through the LNG Terminal no less than 25 percent of total quantity
     of natural gas that such company annually supplies to the natural gas
     system;
  2. The Law establishes that the natural gas brought through the LNG terminal
     shall be preferred in supply for the purpose of the state regulated
     generation of electricity and (or) heat. Amount of such gas, equal to the
     amount of natural gas required for the purpose of ensurance of necessary
     operation of the LNG Terminal that is approved by the Government, shall be
     annually allocated based on demand to the producers conducting the business
     of state regulated energy generation, under the agreements concluded with
     the designated supplier for the term of 5 years, or under the mutual
     agreement of the parties, for a longer period of time.
  3. The Law also provides the Government with the competence to establish the
     time period of application of the above mentioned commitment, which may not
     exceed 10 years as of commencement of operation of the LNG Terminal.
     Application of such commitment may be suspended or terminated provided a
     diversified supply and consumption of natural gas as well as security and
     reliability of the energy supply and safeguard of the consumers' interests
     are ensured.

The Law also specifies provisions related to the financing of the LNG Project
that should come into effect as of 1 January 2014. The Law establishes that all
fixed operating costs of the LNG Terminal, its infrastructure and connection
necessary for the ensurance of operations of the LNG Terminal and only those
installation costs of the same which are not feasible for financing from other
resources available to the company shall be included into the supplementary
constituent of the natural gas transmission price for security of the natural
gas supply. 

The Law shall come into force upon its signature by the President of the
Republic of Lithuania and publishing it in “Valstybės žinios” (State News). 

Once the Law comes into force the European Commission should adopt a decision
regarding further process of the currently suspended pilot procedure regarding
potential breach of EU law. 


         Mantas Bartuška, Finance and  Administration Department Director, +370
46 391 763