generic KN Decides To Buy FSRU Independence
This article was first published on Rigzone here
KN, the operator of Lithuania’s only LNG import facility, has decided to acquire the FSRU Independence from Höegh LNG after its lease ends. The decision on the purchase, which has been regarded as the most economically advantageous option, will be made at a shareholder meeting on February 25, 2022.
Under Lithuania’s law, the LNG operator has to pick the most economically advantageous offer to acquire a floating storage and regasification unit (FSRU) before December 31, 2024, at the latest.
The market consultation and research on the acquisition of the FSRU initiated by KN in 2021, identified three possible alternatives to the current option: a newly built FSRU, used FSRU, or a converted LNG carrier.
When deciding on a specific FSRU, KN considered the life cycle costs of the vessel, not only the purchase price: the age, size, expected operating costs and some technical features of the proposed vessel were very important in the decision-making process. One of the essential requirements for the vessel is the compatibility of the technology with the investments already made, i. e. the construction of the quay and the pipeline.
Following market research and an international procurement procedure, purchasing FSRU Independence emerged as the best option. Also, according to the law, the operation of the terminal located in the Port of Klaipeda, shall be guaranteed until December 31, 2044.
"In deciding on the most economically and technologically advantageous solution, we aimed to provide maximum transparency and a common ground for all market participants to offer alternative solutions to the current FSRU Independence and to ensure a competitive tender. The market research invoked international expertise, interaction with more than 11 potential FSRU suppliers, took into account the views of the terminal's existing customers, also an open public procurement procedure was initiated. The entirety of the actions taken had shown that there was no other more cost-effective option than the current one", says Darius Šilenskis, KN CEO.
Take control of your future.
Search THOUSANDS of Oil & Gas jobs on Rigzone.com
Search Now >>
Should the proposition get shareholders’ support, KN plans to exercise the option it has in place in the lease agreement signed with Höegh LNG in 2012, and that is to redeem the FSRU Independence within the timeframe set out in the lease that has a set deadline of December 2022.
The purchase contract should be concluded no later than 6 December 2024. The purchase price of Independence is $153.5 million, excluding value-added tax (VAT), KN said.
The National Energy Regulatory Council has approved the KN investment in the FSRU on January 6, 2022. The independent regulator has thus acknowledged the benefits of the project.
Once the shareholders adopt the 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 planned to be done in 2022.
To contact the author, email andreson.n.paul@gmail.com
More From Rigzone.com, The Leading Energy Platform:
