Lithuania’s Energy Ministry sends Letter of Expectation to Klaipedos Nafta

AB Klaipedos Nafta has received a Letter of Expectation from its shareholder, the Ministry of Energy of the Republic of Lithuania, which owns 72.47% of the company’s shares.

Courtesy of Klaipedos Nafta

According to Klaipedos Nafta, the Letter of Expectation confirms the direction of the changes sought by the company and enables the company to purposefully create and implement a long-term strategy.

It said that the ministry’s main expectations for the activities of the company and its subsidiaries and potential directions for diversification of activities include:

1. Objectives for ensuring Lithuania’s energy independence:

To ensure that the LNG floating storage and regasification unit (FSRU) ‘Independence’ is acquired into ownership by 31 December 2024, as well as to ensure smooth long-term operation of the Klaipeda LNG terminal until 2044.
To make maximum efforts to ensure the physical and cyber security of the company’s managed facilities important for national security.
To allocate long-term and short-term capacities of the LNG terminal taking into account the national needs of natural gas supply and ensuring national security.
To ensure the smooth operation of managed oil terminals and appropriate technical conditions of the infrastructure.
To ensure the conditions for the long-term storage of state oil product reserves.

2. Transformation and international development goals:

To have a long-term strategy, the implementation, to ensure consistent growth and competitiveness of the company in a climate-neutral economy, adapting to the transformation of the European Union’s green course. To note, in the strategy, the period up to 2030 should be planned in detail, and the period 2030-2050 should be planned by providing priority directions and business development goals and indicators pursued by the company.
To participate in the transformation of the Lithuanian energy sector.
To continue to strive to use the available potential, the experience and knowledge accumulated during the development of the Klaipeda LNG terminal project and subsequent management of the terminal.

3. Financial expectations:

The profitability of the company’s activities must not be lower than the indicators set by the government.
The company must maintain a consistent implementation of the dividend policy, and the level of dividends paid by the company must be at least €5 million in the medium term, starting from 2026, and in the long term, an annual dividend level must be at least €12 million from 2030.
To seek benefits for the shareholders in the execution of contracts for the trans-shipment of oil products.
The company must ensure consistent and sustainable development of its activities, developing existing and new return-generating activities, and acquiring the necessary competencies.

4. Subsidiaries’ activity principles:

The subsidiaries’ group must conduct its activities according to the highest standards of transparency, governance, ethics, and social responsibility, and the company must ensure the efficient operation of the group, effective supervision, and control of the subsidiaries.
The activities of the subsidiaries must be based on transparency, operational efficiency, sustainable development, responsibility and values, and the development of a culture of employee health and safety.

5. Accountability:

To ensure cooperation between the shareholder, the chairmen of the company’s collegial bodies, and the CEO.

In January 2023, on the order of the Estonian energy group Elenger, the Equinor gas tanker Isabella delivered the year’s first shipload of LNG from the United States (US) to the port of Klaipeda in Lithuania, and in December 2022, Klaipedos Nafta and AB Amber Grid, gas transmission system operator, begun a joint process of Open Season procedure at the Klaipeda LNG terminal and Lithuanian gas transmission system.