Lithuania buys Gazprom out of gas industry

By bne IntelliNews June 18, 2014

bne -


Lithuania is on the verge of buying Gazprom out of its gas industry to take full state control, after the Russian state giant tendered its stakes in a buyout of the country's national gas utility and distribution company. 

Gazprom agreed on June 12 to sell its 37.1% stakes in Lietuvos Dujos and gas transmission system operator Amber Grid to Lithuanian state enterprises. The deadline on the buyout offer was June 16, and the Russian company made no reversal of its decision, statements released on June 17 said. 

The transactions are due to be completed on June 19. The shares will be acquired by Lithuania for LTL417.1m (€120.8m). Ernesta Dapkiene, spokesperson for state-owned Lietuvos Energija - which will hold Lietuvos Dujos - told news agency ELTA that everything proceeded as planned, shares were put on sale and the transaction will be completed in three working days. 

Amber Grid said in a statement the takeover bid by state holding EPSO-G to buy 39.96% of its shares "was completed on 16 June". Including the small free float, that hands Vilnius full control of the company it created by forcing a spin-off of the transmission system last year. "From the number of shares proposed for the sale, one may conclude that Gazprom, which currently owns 37.1% shares of the issuer, also decided to sell its shares," the statement notes. 

The buyout comes at the end of a long tussle between Vilnius and Moscow over Lithuania's gas industry, which is 100% reliant on Russian supplies. The government is set to launch operations at a new liquefied natural gas (LNG) terminal at the end of the year, and therefore forced the spin-off of Amber Grid last year, following a bitter fight. Leveraging EU regulation, it then informed shareholders in Lietuvos Dujos that they must sell their stakes in the new distribution company. 

Earlier this year it agreed to buy Germany's E.ON out of its 39% stakes in Lietuvos Dujos and Amber Grid. The acquisition of Gazprom's shares is speculated to be connected to ongoing negotiations on gas prices. E.ON and Gazprom retain their ownership of the gas industries of Baltic neighbors Estonia and Latvia. 

Therefore, the Baltic nation's confrontational stance towards its giant neighbour looks to have reaped no little success. Not only does it now control its gas industry, but it recently won a discount - estimated at 20% - on the price it pays Gazprom for gas to the end of the year, albeit that still leaves the country likely paying around $450 per 1,000 cubic metres, far above the prices Gazprom charges Western European customers. Talks on a new contract from 2016 onwards are reportedly ongoing. 



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