KN Energies signed a contract with FSRU Independence operator Hoegh LNG Klaipėda

On March 29, the international operator of energy terminals AB KN Energies (KN) signed a contract with UAB Hoegh LNG Klaipėda, according to which this company becomes the technical operator of the floating storage and regasification unit (FSRU) Independence of the country’s strategically important liquefied natural gas (LNG) terminal. Hoegh LNG Klaipėda belongs to the Hoegh LNG Group, which has been operating and maintaining the vessel since 2014. 
 
Hoegh LNG Klaipėda won the tender of the technical operator of the Independence last year, beating two international shipping companies. Due to the long-term partnership and constructive cooperation of both parties, the finalization and the signing of the contract was successfully achieved. The newly concluded contract reflects the changed responsibilities of the parties: KN Energies becomes the owner of the vessel, and Hoegh LNG Klaipėda – the technical operator of the FSRU.
 
According to the contract, Hoegh LNG Klaipėda has been entrusted with the technical operations and maintenance of the FSRU for five years, with the possibility of extending the cooperation for another five years.
 
“Since the geopolitical situation has changed, the last couple of years have clearly shown that the Klaipėda LNG terminal is not only the main source of gas supply for Lithuania, but also an infrastructure of regional importance, ensuring gas supply to other countries as well.
 
With the signed contract, we are implementing the decision taken by the Lithuanian state to purchase an FSRU and to ensure its continuous operation after the end of the lease contract. I am sure that by choosing a reliable partner with many years of experience in the operation of FSRUs, we will be able to smoothly take over the ownership of the vessel and ensure the safe and reliable operation of the terminal”, says Darius Šilenskis, CEO of KN Energies.
 
The maximum service provision period stipulated in the contract covers ten years, and the maximum amount of the contract that can be used for this period is EUR 225 million. It consists of fixed and variable operating costs of the FSRU.
 
The fixed part of the cost – the crew’s remuneration and other crew related expenses, excluding taxes applicable in Lithuania, and  the fee to the technical operator for the FSRU – will amount to about EUR 5 million per year.
 
Variable costs, as before, will depend on the repair needs of the FSRU, the volumes of regasification and the price of emission alowances directly related to them, and other components. Variable costs related to the technical maintenance and repair of the vessel, ensuring a sufficient quantity of spare parts, the need for pollution permits will be planned annually and reimbursed according to the fact.
 
Variable costs directly correlates with the utilisation rate of the LNG terminal. Therefore, the estimated maximum value of the contract is indicative, and the actual costs incurred will be calculated according to the real situation.
 
After taking over the ownership of the FSRU Independence and ensuring its operation with an external service, the price of the services for the terminal users will not change substantially. In the years 2025-2033, the forecasted average regasification rate is 1.77 EUR/MWh (about EUR 0.02 per cubic meter of regasified natural gas) and is lower than the rate approved in 2024 – 1.83 EUR/MWh.
 
After establishing the cost-based pricing of the LNG terminal and allocating capacity for the long term in 2022, the Klaipėda LNG terminal collects about half of its income from customers abroad, which for the second year in a row determines that the KN share in the LNG security component is equal to 0.
 
The Hoegh LNG Group, which also owns the winner of the tender, Hoegh LNG Klaipėda, is one of the pioneers of marine LNG energy infrastructure. The company manages and operates floating LNG terminals that help ensure energy security at the national and regional level. The company operating in Norway, Germany, Lithuania, the United Kingdom, the USA, Singapore, Indonesia, Egypt, Colombia, Brazil and the Philippines, currently has around 900 employees and manages 13 vessels: 10 LNG vessels with regasification equipment and 3 LNG tankers. 
 
KN Energies is an international energy terminal operator that ensures safe and reliable flows of liquid energy, loading of chemicals and raw materials for users of the Baltic Sea region, and helps clients all over the world with knowledge and skills to develop sustainable energy infrastructure projects. The company currently operates three terminals for liquid energy products in Klaipėda, Subačius and Marijampolė, and is the operator of liquefied natural gas (LNG) terminals in Lithuania and Brazil. It also provides commercial operation services for four floating LNG terminals in Germany.