Bloomberg News

Klaipedos Nafta Fights German Bid to Delay Baltic LNG Link

January 17, 2013

Klaipedos Nafta AB (KNF1L), Lithuania’s energy terminal operator, said it would defend a possible lawsuit by PPS Pipeline Systems GmbH over the award of a contract to link a natural-gas terminal to the country’s grid.

PPS Pipeline Systems wants a court to annul the tender that a Lithuanian group won on Dec. 20 with a bid of 138 million litai ($53 million), Klaipedos Nafta spokeswoman Indre Miliniene said today in an e-mailed statement. The tender result was “fair and transparent” and the company will defend it in court, if necessary, Miliniene said.

Legal action may delay Lithuania’s plans to start operating a new floating LNG terminal on the Baltic Sea coast in late 2014. Lithuania is seeking to diversify its gas imports in order to reduce its reliance on Russia’s OAO Gazprom. In December, Lietuvos Dujos (LDJ1L) AB, the Lithuanian gas utility controlled by Gazprom and EON AG, asked the European Union to investigate whether laws tied to the project violate EU competition law.

“Theoretically, at PPS’s request a court could restrain Klaipedos Nafta from completing this tender,” Vilius Bernatonis, the company’s lawyer and a partner at Tark Grunte Sutkiene, said in an e-mailed response to questions. “That would be a serious risk for the timing of the whole LNG terminal project.”

Tender Terms

The disputed tender is to build a 20-kilometer (21.8-mile) pipeline linking the terminal to Lithuania’s gas distribution network by Oct. 1, 2014. Two bids were submitted.

Klaipedos Nafta shareholders are scheduled on Jan. 25 to approve a group including Kauno Dujotiekio Statyba AB and Siauliu Dujotiekio Statyba UAB, both from Lithuania, as the winner of the tender, the company said in a statement to the OMX Vilnius stock exchange on Dec. 27.

PPS is preparing to file a lawsuit on the basis that tender lacked transparency and should be held again, Julija Jermakova, a Lithuanian spokeswoman for the German company, said by phone. PPS objected to changes in the criteria for evaluating bids introduced two weeks before the deadline, she said.

Klaipedos Nafta says PPS submitted its bid in full knowledge of the changes and without complaint. The bidder protested only after its offer was rejected, according to the Lithuanian company’s spokeswoman.

Bernatonis said he saw no grounds for PPS to appeal the tender outcome or for a court to order temporary restraining measures against the project going ahead.

To contact the reporter on this story: Bryan Bradley in Vilnius at bbradley13@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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