Lithuania set to discuss gas price cut with Russia

By bne IntelliNews April 17, 2013

bne -

Lithuania is set to open talks with Gazprom over lower gas prices in the coming weeks, Prime Minister Algirdas Butkevicius said on April 17. However, he would not be drawn on the conditions Vilnius is likely to agree in return for a discount.

"At the moment we are waiting for Russia's proposals for the dates for their experts to come here," Butkevicius told Leta. "So far we have not spoken to the Russian side. We expect to learn about their position very soon, maybe even this week. We hope to launch talks in late April or early May."

When asked if in its memorandum of understanding Gazprom sets conditions for cheaper natural gas to Lithuania, which could be included in the official negotiations, Butkevicius said that the formal talks could encompass all kinds of proposals.

"Talks may involve different conditions, this is the purpose of talks. Each side comes with its own proposals. I believe we should have less politicking and more common sense as we prepare for negotiations over the key priority of this government - cheaper natural gas for Lithuania," he said.

Gazprom's major complaint in Lithuania is that it was forced by the previous government to agree to the unbundling of the country's gas pipelines from utility Lietuvos dujos. Vilnius leveraged the most extreme option under the EU's Third Energy Package to push that through. Control of gas distribution is crucial for a plan to diversify sources with the construction of a floating LNG platform.

With the country currently dependent on Russia for 100% of its gas demand, the previous government in Vilnius held a highly confrontational stance towards Moscow. However, from well before his victory in October's election, Butkevicius has spoken of his intentions to follow a more "pragmatic" line.

He met with Russian Prime Minister Dmitry Medvedev and Gazprom CEO Alexei Miller last week, but revealed few details of their talks. "The parties agreed to enter into consultations aimed at reaching agreements on the whole range of cooperation issues by July 31, 2013," Gazprom said in a press release headlined: "Gazprom and Lithuania discuss application of Third Energy Package provisions to Lietuvos Dujos."

Speculation that Vilnius could pullback on the plan to gain leverage on Russian gas prices by diversifying its energy supplies spiked on April 4, when Economy Minister Birute Vesaite said Lithuania could benefit from lower gas prices if it "slowed" the implementation of the Third Energy Package, claiming the country is "paying for its mistakes".

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