KN Selected Technical Operator for the Vessel

Source: 9/8/2023, Location: Not categorized

The floating storage and regasification unit (FSRU) Independence of the Klaipeda liquefied natural gas (LNG) terminal, strategically important for the country, will become the property of Lithuania next year and will be flying Lithuanian tricolor. With the results of the public tender announced, once Klaipedos nafta (KN) becomes owner of the FSRU, Norwegian capital company Hoegh LNG Klaipeda will serve as its technical operator for a minimum of 5 years. This company belongs to the Hoegh LNG group, which is the current owner of the Independence and has been taking care of its operation and technical maintenance since 2014.

The tender for the technical operator of the Independence announced by KN is one of the milestones that will allow to ensure safem reliable and smooth operation of the terminal after Independence becomes the property of Lithuania. In total three international shipping companies that passed the initial selection stage participated in the tender: Hoegh LNG Klaipeda, Wilhelmsen Ship Management, and Mitsui O.S.K. Lines.

The bid of Hoegh LNG Klaipeda met the requirements, the most important of which are the price and quality of the service, the best. This large-scale and complex procurement was overseen by the Public Procurement Service, and applications of the participants were evaluated by experts from KN, technical consultant DNV, and the Lithuanian Transport Safety Administration. The agreement with the tender winner is signed for five years. A possibility to extend it for the same period is foreseen as well.

Terminal management costs will decrease by one third

Until now, the share of the operator’s services was included in the total price of the time charter party agreement price. After FSRU Independence becomes the property of Lithuania, the services will need to be purchased separately. It is estimated that after taking over of the FSRU, the total annual terminal costs will be approximately by one third lower than if the lease is extended under the terms of the current agreement.

It is anticipated that the operating costs of the FSRU will consist of fixed and variable parts. About a third of the amount, i. e. 4.85 million EUR per year, will be a fixed part: vessel management fee and crew costs, excluding taxes applicable in Lithuania. Variable costs will depend on the FSRU need for repairs, regasification volumes and the price of emission permits directly related to them, as well as other components.

The Lithuanian flag will be raised on the vessel

“Klaipeda LNG terminal is strategically important for the energy security of both Lithuania and the Baltic States, it is the main regional alternative to the import of Russian natural gas. This became especially important after Russia’s large-scale invasion of Ukraine. The tender that we announced attracted a lot of interest, which ensured the competitiveness of the bids and allowed us to choose the most favourable option for Lithuania”, says Darius Šilenskis, the CEO of KN.

According to him, it is also important that the operator, who won the tender, will maintain the vessel, which will be flying the flag of Lithuania. Once the FSRU Independence becomes the property of the country, the FSRU will be registered in the Register of Seagoing Ships of the Republic of Lithuania and will be subject to the local legislation, and all taxes from salaries of sailors will supplement the country’s budget.

It is estimated that the alternative to the import of natural gas created by the terminal allows Lithuania to save about 140-150 million euros annually (without the cost of the terminal upkeep).

The winner of the tender manages 10 FSRUs

KN shareholders approved of the acquisition of the FSRU Independence from Hoegh LNG in February 2022. FSRU will become the property of Lithuania at the end of next year.

Hoegh LNG Group, which also includes the tender winner Hoegh LNG Klaipeda, is one of the pioneers of marine energy infrastructure. The company manages and operates floating LNG terminals that help ensure energy security at the national and regional level.

The company operates in Norway, Germany, Lithuania, United Kingdom, USA, Singapore, Indonesia, Egypt, Colombia, Brazil, and the Philippines, currently has around 900 employees, and manages 13 vessels: 10 FSRUs and 3 LNG carriers.

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