MP's call for moratorium on Lithuanian shale gas

By bne IntelliNews February 7, 2013

bne -

Lithuania's Environmental Protection Committee is calling for a moratorium on shale gas drilling and an investigation into the local unit of US energy major Chevron - the only company to bid in a tender in January offering exploration rights.

In a statement posted on the parliament's website on February 6, according to Bloomberg, the committee stated: "The government should halt shale-gas exploration and production until competent European Union institutions give an opinion" on the safety of related technologies.

The parliamentary panel also called for the government to check agreements with landowners made by Investicijos UAB. Prosecutors must "defend the public interest" with regard to the oil and gas company's activities, the committee said.

The call is one of the first hints of a potential change in Vilnius' approach to Russia, which dominates the Lithuanian gas market. While some will see it as capitulation to gas giant Gazprom, others will note that Brussels remains very unsure of the environmental impact of extracting shale gas, and many EU states have a moratorium in place while the issue is researched. Still, the news suggests a debate on Lithuania's energy policy is being reopened by the recently-appointed government.

Andrius Kubilius, the previous prime minister that led his centre-right coalition into several clashes with Russia in a bid to wrest back control of the Lithuanian gas markets, trumpeted Chevron's arrival in October as it bought a 50% stake in Investicijos. "Chevron is such a company that is not afraid to step into Gazprom's field (of influence)," the then PM insisted, according to local press.

That same month, Kubilius lost a general election to the Social Democrats and their allies. The new, left-leaning coalition has always said it will look for a less confrontational relationship with Moscow.

New Prime Minister Algirdas Butkevicius denied on February 6 speculation that the government has promised to pull the plug on projects aimed at expanding Lithuania's options for gas purchases, and that it is already in negotiations with Gazprom on a gas price discount. Those suggestions surfaced following a visit to Vilnius by a senior official from the company on February 1.

"The conservatives would not talk with anyone, therefore today we have the highest gas prices in Europe," the PM told Leta. "I think that such talks have been going on earlier, so it was not the first meeting. There will be more of such conversations and they will take place not because of energy reform or suspension of liquefied natural gas terminal but in order to reach agreement with Gazprom so that Lithuania could purchase cheaper gas."

Following Chevron's role as sole bidder in a tender for exploration rights in January, President Dalia Grybauskaite - a key ally of Kubilius in his bid to break Russia's 100% grip on the gas market - praised the US company, insisting its plans are vital for the country in helping the country find out how far its shale-gas reserves can go as an alternative.

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