Page 18 - FSUOGM Week 46

FSUOGM NEWS IN BRIEF FSUOGM

an increase in the price of gas it supplies to Lithuania hires experts to the contracts, i.e. KN will use the services
Poland, the Polish state-owned oil and gas only when necessary. The assistance of legal
company said on November 9. advise on FSRU acqusiition and commercial experts is expected to be
Gazprom and PGNiG have been available by 2024, and technical until 2025, as
bickering over pricing for years. The Polish Lithuania's KN (AB Klaipedos Nafta), their external competencies may be required
company gained an upper hand recently operator of the oil and liquefied natural depending on the chosen FSRU operating
after a Swedish arbitration court forced gas LNG terminal in Klaipeda seaport, model. The value of the legal services
Gazprom to pay $1.5bn to PGNiG for announced on November 11 it had selected contract is up to €1.045mn, the commercial
previously overcharging for the supplies. the winners of commercial, legal and technical services contract value up to €120,000 and
Gazprom’s request comes just over a services, who will advise the company on the value of the technical services contract
week after PGNiG asked that the Russian the selection of the most economically and up to €230,000. The planned services of
company lower its prices, under the terms technologically advantageous FSRU and its advisory experts will amount to less than 1%
of the long-term supply deal between operating model. They are as follows: Holman of the purchase price of the FSRU.
the two companies, known as the Jamal Fenwick Willan LLP – HFW (legal experts),
Contract. Quality Energy Developments Consulting Ltd
“Gazprom’s renegotiation request – QED (commercial experts) and DNV GL
submitted in response to [PGNiG's] AS (technical experts). CENTRAL ASIA & SOUTH
renegotiation request … is not justified and Behind the decision lies KN's
it does not satisfy the formal requirements determination to come up with a more cost- CAUCASUS
specified in the Jamal Contract and, reflective tariff model in sharing the terminal
consequently, it is ineffective,” the Warsaw- maintenance costs among its users. Condor reports no
listed PGNiG said in a market filing. KN has allocated 8,363,500,000 kWh in
The two companies entered their current regasification capacities for its users from 1 production and sales from
contract back in 1996, covering 10bn cubic October, 2020 until the 30 September, 2021.
metres (bcm) of annual gas supply. The KN disclosed it had signed contracts with Kazakh fields in Q3
contract, which is partially oil-indexed, two customers – Lithuania's state-owned
includes a take-or-pay clause that means electricity and gas supply company Ignitis, Condor Petroleum, a Canada-based oil
PGNiG must pay for at least 8.7 bcm per and Achema. Two Estonian companies – and gas company focused on exploration
year of gas even if it does not take that Eesti Energia and Elenger (Eesti Gaas), are and production activities in Turkey and
much. believed to be among its clients too. Kazakhstan, reported no production and
The recent drop of LNG prices and – to Although the Klaipeda LNG terminal is sales for its Shoba and Taskuduk operations
a smaller extent – of oil-indexed gas prices used by foreign companies, Lithuania has not for its Kazakhstan reportable segment in the
are the probable reasons for which PGNiG signed a political agreement as to how split company's unaudited interim condensed
is seeking a price cut under the Jamal the costs with the countries of their registry, consolidated financial statements for the third
Contract. including Estonia. quarter of 2020.
The contract runs out at the end of 2022 KN has previously announced that "for The discontinuation was due to the sale
and PGNiG has repeatedly said it will not the implementation of the LNG long-term of the Shoba and Taskuduk production
renew the deal. It hopes to replace Russian import solution project in Lithuania, the law contracts and associated field equipment,
gas with LNG, mainly from the US, as well provides for clear time frames and we must which was completed on September 9 for
as Norwegian gas via the planned Baltic select and operate the FSRU by the end of total net proceeds of $23.9mn.
Pipe. 2024, when the FSRU lease contract with Condor’s wholly owned subsidiary, Falcon
Norway's Hoegh LNG expires. Oil & Gas entered into a binding agreement
"In commemorating the sixth anniversary to sell its 100% interests in the Shoba
of the LNG terminal, we are taking another production contract, Taskuduk production
EASTERN EUROPE step in the implementation of the LNG contract and associated field equipment.
terminal business continuity – we are using “The buyer (“Shoba Buyer”) had paid
Naftogaz biggest taxpayer external competencies to ensure the long- $23.1mn as of the Closing Date and the total
term supply of LNG. The LNG terminal has
proceeds were reduced by $0.7mn as an
in Ukraine, paying become a strong natural gas connection in adjustment to the purchase consideration for
the Baltic region and a bridge enabling access the net revenues minus operating costs from
UAH90.3bn to the state to the global LNG market. During January- the properties which attributed to the Shoba
Buyer from December 25, 2019 until the
October of this year, as much as 68 percent
budget in 10M20 of the natural gas was delivered from the Closing Date,” Condor said in a statement.
“The Shoba Buyer paid an additional $0.2mn
LNG terminal to the national gas grid. The
Ukraine’s national gas company Naftogaz LNG terminal, the natural gas transmission in September 2020, $0.2mn in October 2020
Group paid UAH90.3bn ($3.2bn) into the system, the Balticconector connection and in and the remaining $0.4mn in November
state and local budgets in January-October the future – GIPL – all together strengthen 2020.”
2020, including UAH39.6bn of its outstanding the energy resilience of the region to “Following the execution of the agreement
dividends for 2019, the company said in a natural gas supply disruptions and ensure for the Shoba Sale, as of September 30, 2019
press release on November 12. the competitiveness of gas prices used in the related Shoba and Taskuduk net assets
Revenues from Naftogaz Group exceeded the region. Therefore, long-term operation and liabilities were reclassified to assets and
11% of total state budget revenues in of the LNG terminal until 2044 must be liabilities held for sale and the respective
January-October 2020. Naftogaz Group implemented effectively, which we hope results of operations are presented as
remains Ukraine’s biggest taxpayer. In 2019, will happen with the help of experienced discontinued operations for all current and
Naftogaz Group’s tax and dividend payments experts,” commented Darius Silenskis, KN prior periods throughout this news release,”
to budgets at all levels amounted to nearly general director. Condor noted.
UAH121.4bn. External experts will consult KN
according to the hourly rate stipulated in

P18 www. NEWSBASE .com Week 46 18•November•2020