Lithuania concludes gas price negotiations with Russia

By bne IntelliNews November 13, 2013

bne -

Vilnius and Gazprom have concluded talks on fixing the price of Russian gas supplies to Lithuania in a new contract, Lithuanian Energy Minister Yaroslavas Neverovicius told Zinju Radijas on November 12. Neverovicius is not reported to have said whether the talks ended in an agreement.

Lithuania has been pushing for lower gas prices for years, and has stepped up those efforts in the lead-up to the current negotiations over a contract to replace the current deal that expires in 2015. However, it has expressed anger in recent weeks that Gazprom is playing hardball.

"The experts have completed their work," the minister said. "It's time for decision-making for our partners," he added, according to Russian state news agency Itar-Itass. The minister heading the Lithuanian expert group expressed hope that the gas price would be "rationalized."

Currently 100% reliant on Russian imports, Lithuania has been trying to diversify its gas imports. Alongside building links to European infrastructure - primarily Poland - a liquefied natural gas (LNG) terminal that is set to start operations by the end of 2014 is the star of the show. As Neverovicius reiterated, the facility is an extra argument for lowering the price it pays for Russian gas.

Lithuania currently pays around $500 per 1,000 cubic metres, which is far above the price paid by many major European customers. It's also more than either Latvia or Estonia - which are in a similar situation regarding reliance on Russian gas and isolation from European networks. There is a sense in some quarters that Lithuania is being punished for the aggressive stance it has taken towards Russian dominance of its gas market.

On top of that, the negotiations for a new contract come as Lithuania is set to host a vital EU summit later this month, at which several states from the former-Soviet space are due to sign trade and association pacts with Brussels. Moscow wants them to join its Customs Union instead, and is putting pressure on the likes of Ukraine and Moldova.

Lithuania has also been the target of Russian actions, with the PM complaining in October of an "economic war". Part of that accusation stemmed from Gazprom's initial offer on the new gas contract, which Lithuania's president condemned, saying the Russian company made "unreasonable" demands.

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