Lithuania, the most populous of the Baltic countries, has been bullish in pursuing a national policy of energy security to further European integration and mitigate the ripples of geopolitical tensions to its east. And achieving this security is something that Lithuanian energy minister Rokas Masiulis is pursuing with a sense of urgency.
“For us, the most important task is energy security. Our first priority is to finalise our energy security projects,” says Mr Masiulis. One of these major strategic projects is the recently built $128m Klaipeda liquefied natural gas (LNG) terminal in the Baltic Sea. The terminal allows Lithuania to purchase gas from a range of suppliers; previously, it only purchased natural gas from Russia’s Gazprom and paid some of the highest prices in the EU.
Another significant project is the launch of two power lines – one 700-megawatt seabed cable to Sweden and a 500-megawatt overhead line to Poland – to be finalised by the end of 2015. “This will strengthen our electrical position, connecting us to reliable partners in Western countries and lower electricity prices.”
Lithuania’s next step, the minster says, is integration within the European network. “Lithuania, Latvia and Estonia are still on the Russian electrical grid, so we would like to break through and connect to the continental European network. That would be a final step toward energy security," he says.
“Most projects currently under way are financed either by EU subsidies or the European Investment Bank, as most of those projects fall under the European agenda. One of the bigger FDI projects we are developing is a nuclear power plant, where we are working together with Latvia, Estonia and Japanese multinational Hitachi,” he adds. Hitachi, which is providing the reactors, has a 20% stake in the venture.
“In energy we tend to keep most of the assets in government hands, because of previous political tensions with Russian investments,” says Mr Masiulis. “Gazprom was an owner of our gas companies, and this investment has failed. Next year, we will be open to discussions on attracting foreign investment – if this will not harm our energy security priorities.”
Lithuania aims to be a gas and energy hub for the Baltic region, with plans to establish a business and R&D competence centre at the LNG seaport. “We will have interconnections with Latvia, Estonia and, ultimately, Finland and Poland, becoming a cross-country hub for gas shipment thanks to our LNG terminal and Gazprom connections,” says Mr Masiulis. “And, after building our two power lines to Sweden and Poland, Lithuania will become one of the most integrated countries in Europe."
He adds: “In renewables, we are very interested in developing biomass. It is cheaper than gas, even with the current prices. So we have developed a big local biomass production industry.” This venture has come far; almost 70% of Lithuania’s heat is now produced from biomass. “It’s a big game changer. And this was because of Gazprom being so aggressive and raising gas prices; the whole industry refocused and shifted to biomass from gas. Now Lithuanians are selling biomass production equipment to Ukraine, and we hope maybe Ukraine will break through, giving them political independence from Russia.”
On the hot topic of geopolitics, Mr Masiulis stresses that Lithuania was not affected directly by energy disruptions during the unrest in Ukraine. “It is just proof that we were right in choosing an energy independence strategy. We were one of the first to say that this might be coming and you need to be careful. Not many people listened before, but now everybody agrees: energy as a geopolitical weapon is a very dangerous thing. You are better being safe than sorry in investing in your energy capacity,” he says.