Klaipedos Nafta to acquire FSRU Independence from Hoegh LNG

Lithuanian LNG terminal operator Klaipedos Nafta will acquire the FSRU Independence from Hoegh LNG at the end of its lease agreement.

Klaipedos Nafta has been leasing FSRU Independence since 2014 from Höegh LNG. The Norweigan company won an international tender for the supply of a storage vessel back in 2012.

In 2021, KN concluded that the currently leased FSRU is the most economically advantageous option.

Now, this proposal of acquisition waits for the approval of the company’s shareholders. This will take place at the shareholders’ meeting on 25 February 2022.

The Law on LNG Terminal says that the LNG terminal operator shall select the most economical offer for the acquisition. It also says the operator shall acquire FSRU upon ownership right and become the owner by 31 December 2024 at the latest. The operation of the terminal shall be guaranteed until 31 December 2044.

THerefore, KN invoked experts to advise the company in the process of selecting the most economically and technologically advantageous FSRU.

The market consultation and research on the acquisition of the FSRU identified three possible alternatives to the current option:

• a newly built FSRU;
• used FSRU;
• a converted LNG carrier. 

When deciding on a specific FSRU, KN considered the life cycle costs of the vessel, not only the purchase price. One of the essential requirements for the vessel is the compatibility of the technology with the past and current investments.

After taking into account all the elements during the procurement procedure, the potential suppliers in principle acknowledged that they could not offer a more cost-effective solution than the current option; namely FSRU Independence.

KN submits a resolution to the shareholders to approve the acquisition of the FSRU Independence and the terms of the acquisition as set out in the vessel’s lease agreement in 2012. Following the shareholders’ approval, KN will inform Höegh LNG of its decision to exercise the option to redeem the FSRU within the timeframe set out in the lease agreement, with a set deadline in December 2022. The purchase contract is to conclude no later than 6 December 2024.

The purchase price of Independence is $153.5 million, excluding value-added tax (VAT).

The National Energy Regulatory Council has approved the KN investment in the FSRU on 6 January 2022. The independent regulator has thus acknowledged the benefits of the project.

“At a time when Europe is facing an energy crisis and there are concerns about ensuring sufficient gas supplies, Lithuania’s decision to operate the LNG terminal on a long-term basis is far-sighted, and it can only be reaffirmed how important this infrastructure is for the country’s and the region’s energy security,” said Darius Šilenskis, KN CEO.

Once the shareholders adopt a decision on the acquisition of a particular FSRU, KN will have to make additional decisions regarding the operation and management, and registration of the vessel.

This is to wrap up in 2022.