AB Klaipėdos nafta preliminary revenue for the September 2020

AB Klaipėdos nafta (further the Company) reviewed operating segments since the beginning of the second quarter of 2020 and presents revenue disclosures accordingly. The following operating segments of the Company are:

• Oil terminals activity, that includes Klaipėda oil terminal and Subačius oil terminal,
• Regulated LNG activity in Klaipėda and
• Commercial LNG activity, that includes small-scale LNG reloading station in Klaipėda and Business development projects.

The preliminary sales revenue of the Company’s oil terminals for the September 2020 comprised EUR 2.6 million and is higher by EUR 0.1 million or by 4.0 % compared to September of 2019.  The preliminary sales revenue is higher due to increase of transhipment quantities of oil products, compared to the same period of 2019. The preliminary sales revenue of the Company’s oil terminals for the first nine months of 2020 comprised EUR 23.8 million and is in the same level as compared to the same period of 2019.

The preliminary sales revenue of the Company LNG terminal for September 2020 comprised EUR 3.6 million (during the same month of 2019 – EUR 5.9 million). LNG terminal revenue consists of the regasification tariff fixed part (for booked annual capacities), variable part for amount of re-gasified LNG and reloading revenue from regulated activities. The level of Klaipėda LNG terminal revenue (for booked annual capacities) does not depend on regasification volume. Revenue is confirmed by the National Energy Regulatory Council (NERC) based on the approved methodology of State regulated prices in the natural gas sector and is calculated for the whole upcoming year. The preliminary sales revenue of LNG terminal for the first nine months of 2020 decreased by 38.5 % due to the reduction of security supplement of Klaipėda LNG terminal from the 1^st January of 2020.

The preliminary sales revenue of the Company’s Commercial LNG activity for the September 2020 comprised EUR 0.2 million.  If compared to the respective period last year, the preliminary sales revenue is higher due to Business development projects consultation revenue and increase of small-scale LNG station revenue. The preliminary sales revenue of the Company’s Commercial LNG activity for the first nine months of 2020 comprised EUR 2.0 million.

Total preliminary sales revenue of the Company for the January-September 2020 amount to EUR 58.5 million and is lower by 24.2 % compared to the same period of 2019 - EUR 77.2 million.

Preliminary revenue of the Company, EUR million:

	September			January - September
	2020	2019	Change	2020	2019	Change
Oil terminals activity	2.6	2.5	4.0%	23.8	23.9	-0.4%
LNG terminal activity	3.6	5.9	-39.0%	32.7	53.2	-38.5%
Commercial LNG activity	0.2	0.0	100.0%	2.0	0.1	20 times
Total	6.4	8.4	-23.8%	58.5	77.2	-24.2%

Comment by the Company management:

The main factor, which influenced the total Company‘s revenue result in January-September, 2020, was lower revenue of Klaipėda LNG terminal, following from the KN decisions, adopted in 2019, to optimize Klaipėda LNG terminal costs and reduce the cost of LNG terminal infrastructure for consumers, starting from 2020. Due to the implementation of this decision, KN revenue for the nine months period was lower by 20.1 million EUR.

The operation of oil terminals continues to be further affected by the economic impact of COVID-19 as the period of negative oil refining margins continues due to the continuous lower demand for petroleum products. This affects the volumes of refinery operations and, consequently, leads to lower volumes of transit and handling of oil products, while maintaining the demand for long-term storage of oil products. Despite unfavourable market conditions, KN managed to achieve 4% higher oil terminal operating revenues in September 2020 compared to September 2019. Also, in nine months of 2020 Company ensured preliminary revenues from the operation of oil terminals similar to the corresponding period a year ago. We hope that our long-term clients in Belarus will fulfil their contractual obligations for oil product handling and that political developments will not affect the dialogue on further cooperation in the next contractual period.

Jonas Lenkšas, Chief Financial Officer, +370 694 80594.