Lithuania proves prescient on risk of Russian energy


If anyone doubted the delicate messaging of Lithuania’s overseas coverage, it turns into clear from the title of the floating liquefied pure gasoline (LNG) terminal that the Baltic nation constructed to wean itself off Russian gasoline: “Independence”.

“The name is symbolic: it’s against Russia, it’s against Russian gas,” explains Mindaugas Navikas, chief business officer of KN, the operator of the Independence terminal.

Lithuania was one of the primary nations to really feel Russia’s weaponisation of energy. After it declared its independence from the Soviet Union in 1990, Moscow pressured it by chopping oil deliveries and lowering gasoline provides. “It was a very good wake-up call. . . a reminder of how vulnerable we were at that time,” says Albinas Zananavičius, Lithuania’s deputy energy minister.

More adopted. An oil pipeline from Russia to Lithuania was closed in 2006 for repairs, and has nonetheless not re-opened. And, within the 2000s and 2010s, Lithuania was paying one of the best costs for gasoline in Europe from its sole provider, the Russian group Gazprom.

“We were an island isolated from all friends,” says Linas Linkevičius, former overseas minister. “We paid the highest prices in Europe.” Navikas says merely: “We know how Russia is behaving and it’s not about business.”

By 2014, the Independence terminal was in place on the Baltic Sea port of Klaipėda. The authentic plan was to offer competitors to Gazprom — and, certainly, the Russian firm lowered its costs to Lithuania because the terminal got here on-line.

But the terminal was controversial as LNG costs have been above the pipeline prices. Every Lithuanian needed to pay a price for the terminal on their gasoline payments.

“At the time, it looked a very crazy idea” says Zananavičius. “It didn’t make very obvious economic sense. But it was like an insurance policy.” He provides that the terminal now’s on a sound financial footing.

National delight: navy personnel elevate the Lithuanian flag as Independence strikes into place in 2014 © Ints Kalnins/Reuters

Since Russia’s invasion of Ukraine in February, and the ensuing scramble throughout Europe to cut back energy purchases from Moscow, Lithuania’s determination has appeared prescient. The insurance coverage coverage has been cashed in.

The LNG delivered to Klaipėda not solely provides Lithuania with gasoline but in addition Latvia, Estonia, and even Finland and Poland. The terminal’s capability is 30-40 per cent greater than Lithuania’s consumption however solely about half of that of all of the Baltics and Finland, in response to Navikas.

So he welcomes plans by Finland to have its personal floating terminal, to additional ease the area’s energy worries. KN, with eight years of expertise from Independence, can also be now working an LNG terminal in Brazil and promoting companies to others being inbuilt Germany, Croatia and South America.

Navikas argues that it is necessary for governments to take energy choices — which might take a decade to come back to fruition — with geopolitics and geostrategy in thoughts, greater than a sole focus on financials.

“Most likely it means it should be politically driven decisions, not economic decisions,” he says. “If it would be only business decisions, I don’t know how it would end up.”

With oil independence achieved in 1999 due to its personal terminal, the final remaining piece of the puzzle for Lithuania is electrical energy. The Baltic nations are nonetheless related to an electrical energy system with Russia and Belarus, often called Brell.

Although Lithuania now not imports electrical energy from Russia, it’s a large energy importer from different nations, as its essential native supply of technology, the Ignalina nuclear plant, was closed in 2009 as a consequence of security considerations. A plan to construct a substitute fell via as a result of outcomes of a referendum, leaving Lithuania because the nation importing probably the most electrical energy within the EU. “The blame game is still continuing,” says Zananavičius of the referendum.

Lithuania has constructed electrical energy interconnectors to Sweden and Poland however costs have nonetheless been very excessive this yr. Zananavičius says: “The war in Ukraine shows that, despite good interconnections, it’s necessary to generate a certain amount of electricity — at least 70 per cent — locally, in order to ensure your security of supply and to get isolated from extreme price shocks.”

The present authorities has bold renewable energy plans — largely offshore wind, and photo voltaic — and goals, by 2030, to achieve 9GW of capability, roughly the identical as nationwide demand. At the identical time, Lithuania intends to desynchronise itself from Brell and be part of the system utilized by the remaining of Europe by 2024 — although in the meanwhile the connection helps stabilise Lithuania’s grid, offering a attainable level of leverage for Russia.

“This vulnerability is a bilateral vulnerability,” says prime minister Ingrida Šimonytė, who factors out that the Russian semi-exclave of Kaliningrad is equally weak. She says any incident that threatened the Brell connection could be demanding however “not a calamity”, including: “We can’t exclude that the Russians would want to do it.”

The conclusion, says Margarita Šešelgytė, director of the Institute of International Relations and Political Science at Vilnius University, is that Lithuania did nicely to wean itself off Russia however failed to spice up its personal manufacturing.

“Our dependence on Russia is close to zero,” she provides. “So we can survive without Russia. That lesson we have learned. We did everything to avoid dependency. The problem with energy is we don’t produce energy so that is why we have very high prices.”

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