The year of 2018 was full of challenges for KN (AB “Klaipėdos nafta”) – the operator of oil products and liquefied natural gas terminals: the situation in the market was tense and dynamic with the geopolitical environment being the intensive irritant and the growing costs being the major concern. Nevertheless, a slight decrease was witnessed in the last year’s flows of oil products and natural gas cargoes, if compared to 2017, and the company has managed to achieve the scheduled profitability indicators.
Because of the risks related to the tense geopolitical situation and the investments focused on the newly developed activities aimed at enhancing the company’s competitiveness by attracting transit flows of oil products in the future, in 2018, KN planned a far more conservative budget and declared the goal to earn EUR 10.2 million of profit.
In accordance with non-audited financial statements, in 2018, the company achieved its goal and earned the net profit of EUR 11.5 million. The company earned EUR 100 million in revenues, whereas in 2017, it earned EUR 106.5 million.
The summarised non-audited data of 2018 shows that last year KN’s turnover of oil products reached 6.69 million tonnes, whereas in 2017 it amounted to 7.18 million tonnes. The slight decrease in the loading was determined by lower flows of refined oil products from the refinery of “Orlen Lietuva”, since it directed more of its production by railways to neighbouring countries.
“Despite the tension between the neighbouring states in the sector of oil and oil products logistics observed in 2018, we were successful in preserving stable transit cargo flows. The last year’s general decrease in these flows amounted to 5.3%. KN still occupies the leading position among all other oil product terminals of the Baltic Sea rim, except for the Russian port of Ust-Luga,” notes Mindaugas Jusius, CEO of KN.
The slightly lower oil product loading influenced the sales revenues of Klaipėda and Subačius oil terminals, which earned EUR 35.2 million, i.e. 7% less than in 2017.
According to Mr. Jusius, it is expected that after the 2nd stage of investments, during which 10 new storage facilities, a new unloading overpass and a new railway line will be constructed, is over, it will be possible to increase the flow of oil products up to 7.2 million tonnes. The implementation of these projects will enable the KN oil terminal not only to reload bigger amounts of oil products, but also to accept a wider range of oil products and their components.
In 2018, a total of 9.2 thousand MWh of gas was regasified and reloaded at the LNG terminal compared to 12.6 thousand MWh regasified and reloaded in the same period last year. The scope of activities of the LNG terminal was lower due to the lower terminal users’ demand for capacities, which is related to the growth of LNG prices. This also influenced the revenues of the LNG terminal, which amount to EUR 64.5 million and are 5.4% less than the amount of revenues received in the same period of 2017.
Last year, the chain of activities of LNG terminal was enhanced with an LNG distribution station, where a total of 64 thousand MWh of LNG was reloaded in 2018. The newly developed LNG logistics chain of the Baltic Sea Region has also been strengthened by the world’s largest LNG feedering and bunker vessel “Kairos”. The vessel used for LNG reloading operations from Klaipėda LNG terminal to the LNG distribution station situated next to the gates of the Port of Klaipėda has already performed two small-scale reload operations this year.
“Kairos” will help assure a more competitive price of the LNG supply chain and a smooth and prompt service provision for users of the distribution station,” Mindaugas Jusius, KN CEO, said.
According to him, this year, KN will pay much attention to the LNG operative line, which will also be reflected in the long-term strategy of the company to be presented in 2019. Seeking to use the accumulated experience, KN is planning to develop other LNG terminals on various continents, to become a shareholder of developed terminals and to provide the services of operation and maintenance.
“The company is now facing the time of very responsible decisions. On the one hand, we have to get ready for additional financial liabilities while preparing for the decision delegated to us by the state regarding assurance of the long-term LNG import, and on the other hand, we have to meet the expectations of the shareholders and to earn the set return. We see large potential in the increase of the export of our accumulated specific knowledge (know-how). We have a clear vision, which is based on the development of international LNG terminals in other states, and we have ambitious plans for development on the global market,” KN CEO shared the company’s plans.
The energy sector, similarly as other sectors, does not have an immunity against the growing costs. With the growth of costs being as fast as the growth of revenues, the operational efficiency becomes relevant more than ever. Therefore, this year KN will pay more attention to the decrease and efficiency of costs in all fields of the organisation. The company has been applying the policy of cost reduction since the last year’s early December. It has thoroughly reviewed and improved all of its operational processes, and largely undercut the costs when forming this year’s budget.
Despite the fact that the company will not postpone the planned investments into the environmental protection which are provided for in the Plan of Environmental Measure drafted and publicly presented last year.
“We have committed to communities to further develop sustainable activities and ensure the highest environmental standards, and we are going to do that. We expect that KN investments into the environmental field will reach EUR 8 million by the end of 2021,” Mr. Mindaugas Jusius estimates.
Seeking long-term goals of the organisation, last year the company paid a great deal of attention to the enhancement of the organisational culture: it further introduced updated virtues, on the basis of which the new Code of Conduct of KN was approved. This Code of Conduct is relevant not only for KN employees, but also for members of the Board and the Supervisory Council as well as for KN partners, clients and suppliers.
This year’s changes in the organisational culture of KN also include the implementation of the changes in the system of motivation, which provide for payment of part of rewards to employees via the shares of the company.
According to Mindaugas Jusius, KN CEO, with this decision the company seeks to enhance the employees’ motivation for achievement of long-term goals of the company, enhance the employee involvement and promote the responsibility for common operational results.
