This is a reprint of an article originally published in 2015
Klaipeda LNG, a project that was open to ridicule last summer, has now become a successful policy due to a combination of price leverage with a previous monopolist supplier, a global LNG supply glut that had its origins in the shale booms of Bakken and Marcellus, and the implementation of new technology.
What then, does the implementation of a similar FLNG project in neighbouring Kaliningrad mean for Lithuania? Lithuania held some leverage over Gazprom and Russia, which is a transit state for natural gas to the Russian exclave. Put simply, if the taps went off for Lithuania, then they would also go off for the Kaliningrad oblast.
Historically, Lithuania had an understanding with Russia that as long as the natural gas flowed to Kaliningrad Russia would provide services and fuel for the Nuclear Power Plant (NPP) in Lithuania. Following the shutdown of the NPP first in 2004 and then in 2009 it became more difficult to find a balance to the relationship. Building the Klaipeda LNG terminal, which had more than enough import capacity to meet Lithuania’s own gas needs, meant that Lithuania was no longer in a mutually dependent situation with Russia, which left Kaliningrad’s energy security significantly more vulnerable. The new FLNG terminal in Kaliningrad rebalances the relationship.
Related – KLAIPEDA LNG: DESTINED FOR EXPORTS?