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Lithuania Natural Gas Security Policy

Part of Natural Gas Security Policy

Natural gas became a pillar of Lithuania’s energy mix after the country decommissioned its sole nuclear plant. Since 2011, the role of natural gas has decreased in the wake of increasing investments in renewable energies, the closure of older gas-fired plants and the increased use of biomass for district heating. The decline in natural gas consumption led to a steady fall in Russian imports. However, natural gas remains the second most prominent fuel in Lithuania, after oil. Natural gas is now mostly used by industry, with the region’s largest fertiliser and chemicals company Achema accounting for more than 50% of the country’s gas consumption.

Lithuania is entirely dependent on natural gas imports as the country has no domestic production. Until 2014, Lithuania was fully dependent on imports of Russian gas, either directly through interconnection with Russia, or from its connection to the Incukalns storage facility in neighbouring Latvia, where Russian gas is typically stored in the summer for use in the winter. Thanks to the commissioning of the Klaipeda liquefied natural gas (LNG) Terminal at the end of 2014, Lithuania diversified its gas supply. In 2019, the utilisation rate of the LNG Terminal was 49.3%, the highest since its construction. Despite the fact that Lithuania is not yet connected to the European gas pipeline network, the Gas Interconnection Poland-Lithuania (GIPL) enables Lithuania, Latvia and Estonia, as well as Finland, to trade natural gas with continental Europe. At the same time, Lithuania’s retail gas market for households is highly concentrated and governed by regulated prices.

Lithuania is committed to a sustainable transition towards climate neutrality, and natural gas is expected to play a role in the transition towards a low-carbon economy. Gas-fired power plants will continue to provide flexibility for the integration of rising renewable energy sources in coming years. The government is also planning on promoting LNG and CNG use as alternative fuels in the transport sector along with green gases. Work has started on scaling up current biogas to bio-methane production and promoting the production and transportation of hydrogen in Lithuania.


Networks: transmission and distribution

Lithuania's gas transmission and distribution network consists of 2 113 kilometres of gas transmission pipelines and around 20 000 kilometres of distribution grids. The network has two gas compressor stations, three gas metering stations and 65 gas distribution stations. A major supply pipeline from Russia enters Lithuania in Kotlovka at the Belarusian-Lithuanian border and is unidirectional. There is also a connection to Latvia through a bidirectional pipeline which provides Lithuania with access to the Incukalns underground gas storage facility and to Latvian and Estonian gas markets, and gives these countries access to the LNG terminal in Klaipeda. Lithuania also serves as a transit country for Russian gas flowing to the Kaliningrad Region upon a long-term transit contract with Gazprom, extended in 2015 until December 2025.

LNG terminals and interconnections

The Klaipeda LNG Terminal started operating in December 2014 and consists of a Floating Storage and Regasification Unit (FSRU), named “Independence”, with a total capacity of up to 10.25 mcm/d and has LNG storage for 170 000 m3, a berth and a 18 km gas pipeline connecting it to the transmission system. The FSRU was built by Hyundai Heavy Industries Co., Ltd. and is owned by Leigh Höegh LNG (Norway). It is permanently moored to a berth in the Klaipeda seaport. As of 1 April 2020, PGNIG S.A., the biggest Polish gas company, has the exclusive right to use the LNG reloading station located in the sea port of Klaipeda, becoming its sole user (PGNiG, 2020).

Lithuania has no domestic natural gas production and is thus fully dependent on imports. Lithuania’s gas network has three entry points, with Belarus, Latvia and from an LNG FSRU in Klaipeda. The largest entry point to Lithuania’s gas network is the interconnection with Belarus, which also transits gas to the Russian exclave of Kaliningrad. The interconnection with Latvia provides Lithuania access to the Incukalns underground gas storage facility in Latvia, as there is no underground gas storage in Lithuania.

Network resilience

Lithuania currently meets its EU infrastructure standard for N-1 with 153%. The single largest infrastructure element is the interconnection with Belarus, where one-third of supplies via this entry point are used to supply the Russian exclave Kaliningrad. Completion of GIPL project will raise infrastructure standard for N-1 to over 200%.

Natural gas net imports in Lithuania, 2000-2020

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Lithuania natural gas infrastructure, 2022

map of Lithuania's Gas Infrastructure

Organisation

The Emergency Situation Operations Centre (ESOC) under the Ministry of Energy is the authority with competence over the State’s natural gas supply security in Lithuania. The Ministry of Energy has an emergency centre for crisis management, involving sixteen different specialists, with three gas experts and additional members potentially invoked in times of crisis.

According to the National Emergency Plan, in case of an emergency, Amber Grid, as a transmission system operator (TSO), is the “crisis manager” responsible for system balancing, gathering and transmitting critical information, and making recommendations to the Ministry on crisis response. The distribution system operator (DSO) is responsible for security of the distribution system and guaranteeing gas supply to protected consumers, while the LNG terminal operator is responsible for providing information about technical LNG terminal capacities.

Lithuanian emergency gas policy, which relies on market-based instruments even in the event of the most serious crises scenarios, reflects the specific structure of its domestic gas consumption, with protected gas consumers (consisting of households and essential services), representing only a small portion of overall natural gas use, and primarily using the fuel for cooking rather than heating.

All companies participating in the gas market are obliged to have their own emergency response plans. In an emergency, these companies are obliged to provide information to the TSO, which in turn provides it to the Ministry. The National Emergency Plan details schemes for the frequency and type of information that must be provided under crisis situations, including forecasts on available supply through all entry points, gas storage volumes held in pipelines, at the LNG facility and in the Incukalns storage facility, the number of days cover that such storages provide for vulnerable consumers and other uninterruptible contracts, and information on the volumes of gas being consumed for the production of electricity and heat. The TSO would provide instructions to suppliers on the application of any restrictions or phasing-out of gas supplies, with pre-established priorities for the transportation and delivery of available gas supplies.

Gas electricity interlinkage and coordination

Combined heat and power generation is replacing old gas power plants for electricity grid balancing to include the increasing share of variable renewable generation.

Obligation for emergency gas storages

The “Description of the Measures to Safeguard the Reliability of Natural Gas Supply” designates priority consumers in cases of major or partial gas supply disruptions, taking into account the amount of gas available in the pipelines, in gas storage facilities and technical possibilities of the gas system. In line with EU gas security rules (Regulation 2017/1938), natural gas storage must be maintained at a level sufficient to supply vulnerable consumers under the following cases: a 30-day period of exceptionally high gas demand (coldest period); or extreme temperatures in a peak period of seven days, which occurs once every 20 years based on statistical probability; or a period of at least 30 days of average winter conditions in the event of disruption of one of the largest gas infrastructures.

Supply companies are responsible for the uninterrupted supply of gas to vulnerable consumers and must store gas reserves for such consumers as well as for any consumers with whom uninterruptible contracts have been concluded. The majority of gas held for this purpose is stored in the Incukalns facilities in Latvia, which held about 38 mcm in 2019. The gas suppliers must provide a security report to the Ministry of Energy every year, including information about the volume and location of their gas in storage; instances of not fulfilling their storage obligations could result in suspension of supply permits.