Russian energy giant Gazprom wants Lithuania to hold talks on plans to unbundle the gas sector, as doing so would hurt its investment in the country, the company said in a letter seen by Reuters on Wednesday (25 August), which also threatens court action. Lithuania reacted strongly to the pressure.

The Lithuanian government has decided to separate gas supply and transport assets to increase competition and drive prices down. It says this policy is in line with European Union regulations, but it still has to approve a draft law.

"The draft law proposed by the energy ministry foresees the implementation of the [gas] directive in such a way that it would have the most negative effect on our investments," Valery Golubev, the deputy chairman of Gazprom's board, said in a letter to Lithuania's prime minister.

Gazprom said in the letter it could turn to a court of international arbitrage to claim compensation for losses if Lithuania does not start consultations over its gas sector reform.

Lithuanian Energy Minister Arvydas Sekmokas said both Gazprom and Germany's E.ON Ruhrgas had been invited to join the working group to draft the bill but added that Lithuania would not bend under pressure and would adopt the law by next March.

Sekmokas said demands from the two companies could be seen as "pressure from large companies on a small country".

The government wants unbundling to be completed by March 2012, in line with an EU deadline, he added.

In 2004 Gazprom invested $35 million to buy 37.1% of Lithuania's main gas company Lietuvos Dujos, of which E.ON has another 38.9% while the state owns 17.7%.

(EurActiv with Reuters.)