Statoil and Litgas plan a joint venture to develop their LNG business

Norway’s Statoil and Lithuania’s Lietuvos Energija have a preliminary agreement to develop a liquefied natural gas (LNG) supply operation in the Baltic Sea, providing competition to Finnish gas company Gasum.

Litgas, the LNG subsidiary of state-owned Lietuvos Energija, and Statoil came to an agreement last Thursday to establish a joint venture by the end of 2015, reported Reuters.

The two companies will use Lithuania’s LNG terminal Klaipėda as the hub to distribute LNG to ships and in tanks with smaller quantities for inland destinations unreachable by pipelines.

"This is a market in its infancy, but is expected to grow quite considerably in years to come," said Geir Heitmann, vice president for LNG trading for Statoil.

After the joint venture was agreed on Thursday, operations are expected to start in the last quarter of 2017 at the latest.

This will prove a mayor challenge for Finland’s Gasum, who after the acquiring 51 per cent of Norwegian LNG distributor Skangass, expected to become the largest operator in the Nordic region.