All agreed loans

Lithuania. AB Klaipedos Nafta

Date of agreement: 20 Dec 2019
Country: Lithuania
Customer: AB Klaipedos Nafta
Amount in EUR: EUR 134.1 million
Maturity: 25 years
NACE sector / loan type: Manufacture of refined petroleum products
Business area: Energy and water

Project

The loan has been granted to finance the balancing of liquefied natural gas (LNG) infrastructure costs by partly covering the operating lease payments and reducing the tariff for the customers.

The Floating Storage and Regasification Unit (FSRU), used for LNG operations in Klaipeda, is leased from the Norwegian Höegh LNG on a ten-year lease arrangement that expires in 2024.

The Lithuanian government has decided that it is necessary to secure long-term import of LNG to the State and to acquire a chosen FSRU after the termination of existing contract, as this has been calculated to produce greater economic benefits than extending the lease agreement.

The strategic decision also includes measures to balance the LNG infrastructure tariff for current and future consumers throughout the lifetime of the LNG terminal.

The tariffs cover the annual lease payments, which are approximately EUR 45 million per year. Each year around EUR 26.8 million of the loan proceeds will be used to cover these lease payments during 2020–2024.

The LNG terminal in Klaipeda, called “Independence”, was inaugurated in 2014. The project was developed to secure the natural gas supply by breaking down the market dominance of a sole supplier.

This is NIB’s third loan agreement related to LNG infrastructure developments in Lithuania; the first two loans were signed with AB „Klaipėdos nafta“ in 2014 and 2017, respectively.

The majority state-owned company AB „Klaipėdos nafta“ is operator of LNG and oil terminals. It is one of the largest energy resources logistics companies in the Baltic States.

The decision to grant the loan was based on its strategic importance to Lithuania. The transaction does not fulfil the definition of a project based on NIB’s mandate rating framework and therefore was not evaluated.

Sustainability summary

The climate impact is the major environmental issue associated with this type of economic activities.  In general, the assessment of greenhouse gas (GHG) emissions needs to take into account the life-cycle of LNG, including production, liquefaction, transport, regasification and gas use. The determining factors comprise the energy demand of production, the potential use of carbon capture and storage (CCS) technology, LNG transport distances and methane releases throughout the life-cycle.

The forecasted FSRU utilization rate is 25% and LNG can be delivered from different parts of the world. Based on these assumptions, the estimated GHG emissions associated with the LNG supplied through the FRSU range from 2,535,000 tonnes to 3,156,000 tonnes of CO2 eq annually, depending on the source.

Press release

NIB ir toliau finansuos SGD terminalo veiklą Lietuvoje