“ENERGY SECURITY IN LITHUANIA”

April 10, 2013

Stockholm

EITVYDAS BAJARŪNAS

Ambassador of Lithuania in Sweden

Energy – general situation

BEMIP – main projects

Lithuanian EU Presidency

• The Baltic Sea

region connected

but divided

• Dependency from

single external

supplier

• Main problem for

market integration –

lack of energy

infrastructure

Dependence – Challenge for Energy Security

Source: Lithuanian Ministry of Energy, 2011

Cost of energy resources for Lithuania ~ $ 3.5 bn (2011)

Current situation in Lithuania

Lithuania imports 80% of required energy

Lithuania imports 62% of electricity

Highest ranking in the EU. A country is considered

energetically insecure if it imports more than 15% from

one supplier…

Lithuania is 100% dependent on a single

source gas supplier

5

6

Dependence on Eastern Power System

RG Continental Europe

RG Nordic

UPS/IPS

RG Baltic

RG Ireland

RG UK

Source: European network of transmission system operators for electricity

(ENTSO-E), 2009.

EN

TS

O-E

EstLink 350 MW

7

7

Dependence on Single Gas Supplier

< 50 %

50-80 %

80-

100 %

Sources: BP Statistical Review of World Energy, June 2010

Europe’s energy portal, 2010

Gas prices for Lithuania (2012):

~ USD 500 per 1,000 cu. m

Gas Share in the National Energy Mix

< 10 %

10-20 %

20-30 %

> 30 %

Sources: BP Statistical Review of World Energy, June 2010

Europe’s energy portal, 2010

Eurostat, 2010

International Energy Agency, 2010

Pro-

duction

Consumptio

n

(+) Exp.

(-) Imp.

LT 4.7 10 -5.3

LV 5.7 7.5 -1.8

EE 11.3 8.2 3.1

∑ 21.7 25.7 -4

2011

(in TWh)

Dependence on Electricity Import

Import forecast (2020) – 10 TWh

New NPP capacity – 1350 MW

• DEPARTURE POINT Energy island = No energy market

• INSTRUMENT Regional dimension – Baltic Energy Market Interconnection Plan (BEMIP)

• RESULT Fully operational and integrated EU energy market

BEMIP - the main instrument to

guarantee regional energy security

Baltic interconnections and market

integration via BEMIP

1 2

3

4

Estlink-1 350 MW Exists

Estlink-2 650 MW 2014

NordBalt 700 MW 2015

LitPolLink 500 MW 2015

500 MW 2020

1

2

3

4

EE

PL

LT

LV

FI

SE

BY

RU

Integration into EU energy market –

strategic goal of Baltic States

Baltic Energy Market Interconnection

Plan (BEMIP):

Interconnections with Sweden,

Finland and Poland

Creation of common Baltic and

Nordic electricity market

Market integration will enable equal

and transparent trading rules and

effective competition

Interconnection with Sweden „NordBalt“

• NordBalt is a planned 700 MW submarine

power cable between Lithuania and Sweden

• NordBalt is expected to cost EUR 552 million,

of which EUR 175 million is provided by the

European Economy Recovery Plan

• NordBalt is targeted for completion by the end

of 2015

• A number of preparation works have already

been completed: a seabed survey for the NordBalt interconnection in

the Baltic Sea;

preparation of the technical specifications for cable

and converters;

preparation of territory planning documents;

contracts with the Swedish energy and automated

technologies company ABB for the production and

installation of a 300 kV HVDC cable and converter

stations for the NordBalt interconnection signed;

the Government of Lithuania granted permission to

lay the cable in the territory of Lithuania and territorial

sea.

Interconnection with Poland „LitPol Link“

Alongside with the “NordBalt” project Lithuania and

Poland are developing another strategic power

interconnection project – “LitPol Link” – which is

planned to be finished by the end of 2015.

This interconnection is playing a key role in

connecting the Baltic States with the European

energy markets and breaking energy isolation of the

Baltic States.

The successful development of this project also

includes participation of Swedish company ABB,

which was selected as a main contractor for the

installation of the high voltage direct current

back-to-back converter station with the 400 kV

switchyard in Alytus, Lithuania.

This is another example of how Sweden and its

companies contribute to the development of

strategic energy projects in Lithuania.

Visaginas NPP

The referendum on Visaginas NPP (14 October 2012) was of

advisory nature and the Parliament has tasked the

Government to evaluate its results.

Currently governmental working group of experts is preparing

an economically viable strategy for electricity supply in

Lithuania, which will evaluate available options for reliable

electricity generation, including also the issue of NPP project

development.

Positive decision regarding nuclear alternative (Visaginas

NPP) of electricity supply will mostly depend on strong

engagement of regional partners as well as strong

commitment of “Hitachi-GE”.

Synchronization with ENTSO-E

Baltic States expressed common will to become an integral

part of the European Continental Power Network.

The European Commission was mandated to negotiate the

future of BRELL agreement with Russia and Belarus, in the

view of the political objective of the Baltic States to fully

interconnect with the European grid.

The feasibility study on synchronous connection of the Baltic

States to the European networks will be presented later this

year (autumn 2013), but it is already clear that second power

link between Lithuania and Poland will be necessary to

connect the networks synchronously. In this regard we see

LitPol Link 2 project as a future strategic goal for the whole

region.

Projects in gas sector

LNG terminal

200 million EUR

LT-PL gas pipeline

250 million EUR (?) 16

Source: Lithuanian Ministry of Energy, 2011

Local LNG terminal in Lithuania

• Klaipėda LNG terminal project is planned as a

fast-track infrastructure development option

while implementing mandatory infrastructure

standard (N-1) requirement established under

Regulation (EU) No 994/2010 of the European

Parliament and of the Council of 20 October

2010. For this reason Klaipėda LNG terminal is

intended to be operational by December 3,

2014.

• This is of key importance to Lithuania, since

the current long term gas supply agreement of

AB Lietuvos dujos (current TSO) with OAO

Gazprom will expire in 2015.

Main objectives:

• LNG terminal is the fastest and the most cost-effective solution to ensure diversification of gas supply

and to eliminate Lithuania’s dependency on Russia, as the single gas supplier.

• LNG terminal will serve as a significant benefit towards establishing adequate base capacities for local

consumption demand (in case there will be the disruption of supply from Russia).

• Enhancement of energy security in Lithuania, contribution to the development of competitive national

and EU natural gas markets.

• An access to international gas markets is the precondition for effective response to Gazprom pricing

policy.

Main parameters of Klaipėda LNG terminal

TECHNOLOGY Floating Storage Regasification Unit

(FSRU)

LOCATION Southern part of Klaipeda seaport

FSRU SUPPLIER Hoegh LNG (Norway)

STORAGE

CAPACITY 170 000 m3 of LNG

LOADING

CAPACITY

9000 m3/h of LNG.

Ship-to-ship transfer through

flexible hoses

ANNUAL

CAPACITY* 3 bcm (up to 11 mcm per day)

BUSINESS MODEL FSRU lease with possibility to

purchase after 10 years

• Such capacities will be reached after enhancement of capacity of pipeline Klaipeda – Kiemenai.

Whithout this enhancement annual regasification capacity of Klaipėda LNG terminal would be 2 bcm.

Shale gas

The exploration of shale gas has been identified by

Lithuanian Parliament and Government as one of the

priorities in energy sector; it should be carried out

however in accordance to environmental regulations and

in close cooperation with local communities.

Decision regarding exploration of shale gas is in the

pipeline.

Some forecasts regarding potential of shale gas in

Lithuania: coverage of internal demand for 30-50 years

(till 30 billion USD).

Renewable energy development

Renewable energy – important part of the national

energy strategy

Current level ~20 percent

2020 target ~23 percent

Context of the Lithuanian EU

Presidency

First Lithuania‘s EU Presidency

The mandate of the current European Commission and the European Parliament comes to the end: increased legislative workload;

Elections in MS;

The agreement on MFF and its legislative package;

Europe emerging from the euro crisis and the implementation of related financial-economic initiatives;

Discussions about the future of the EU;

The start of the Lithuanian Presidency hopefully will be marked by the accession Croatia.

Presidency’s priorities

1. Financial Stability: restored confidence

2. Smart Growth and Jobs

3. Open and Safe Europe

National priorities during Presidency

Energy security - completion of the internal energy

market and strengthening the external EU energy policy;

Effective implementation of the EU strategy for the Baltic

Sea Region, including holding the fourth annual

Stakeholder Forum;

Bringing the countries of the Eastern Partnership closer

to the EU and hosting the Eastern Partnership Summit in

November 2013;

Effective management of the EU external borders.

Priorities in the field of energy

Lithuania, during its Presidency, will focus on EU

internal energy market issues and on the

strengthening of external EU energy policy

dimension. These are our national priorities set by the

Parliament.

On 4-5th of November, we are planning to have a high

level ministerial conference in Vilnius on the internal

energy market and on the first European list of PCIs

(projects of common interest).

Informal Energy Council is scheduled on 19-20th

September in Vilnius.

THANK YOU FOR

ATTENTION!