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25/08/2016

Lithuania pressures Commission against Gazprom

Energy

Lithuania pressures Commission against Gazprom

gazprom_pipeline.jpg

Lithuania stepped up a row with Gazprom on 25 January. The dispute pits EU energy policy against gas supplier Russia and reveals more friction between Moscow and its neighbours over energy.

Lithuania said it had complained to the European Commission about the Russian gas giant's grip on supply and distribution in the Baltic state, charges that Gazprom denied.

"The Ministry of Energy of the Republic of Lithuania launched a complaint to the European Commission requesting it investigate the abuse of a dominant position by the Russian gas supplier, Gazprom," the ministry said in a statement.

Lithuania has already clashed with Gazprom, and German partner E.ON Ruhrgas, over plans to separate their gas transport and supply assets according to EU energy policy.

The Lithuanian plans mean Gazprom would have to give up ownership of the country's pipeline system.

The EU's 27 members reached a deal on liberalising energy markets in March 2009. They agreed to split giant utilities' supply networks for gas and power from their production assets to help smaller players compete more fairly.

Russian Prime Minister Vladimir Putin in November intervened on behalf of Gazprom, saying the EU rules were uncivilised "robbery".

Energy Minister Arvydas Sekmokas said Gazprom wanted to prevent the emergence of competition in the Lithuanian market.

"The situation where a fully-fledged EU member state is subject to pressure by the monopoly of a third country just because of a determination to implement the fundamental principles of the EU […] has no equal precedent," he said.

Foreign gas companies have said Lithuania will face supply problems if it goes ahead with seperating supply and distribution, or unbundling, which they regard as unfair.

Any eventuality

Gazprom denied the charges on Tuesday, saying it stuck to Lithuania's laws and a mutually agreed pricing formula for gas supplies.

"This market-based approach to price formation has worked successfully in Europe for over 30 years and the claims that it leads to abusive behaviour by Gazprom are simply incorrect," Gazprom spokesman Sergey Kupriyanov said in a statement.

"Gazprom is prepared to deal with any eventuality."

Gazprom owns 37.1% of Lithuanian gas company Lietuvos Dujos and E.ON has 38.9%. The state has 17.7%.

As the Lithuanian row flared up, an oil dispute between Russia and Belarus drew near a settlement.

Moscow was set to resume oil supplies to Minsk by the end of Tuesday, ending a price row which has left Belarus without oil since the start of 2011.

(EurActiv with Reuters.)

Positions

Lithuania is not seeking to punish Gazprom, Lithuania's Energy Minister Arvydas Sekmokas said, quoted by The Baltic Course.

By appealing to the European Commission on the possible abuse of its dominant position by Russian gas giant Gazprom, Lithuania wants to promote competition in the gas sector and reduce dependence on a single gas supplier, Sekmokas added.

The minister said that his country expected the Commission to launch an investigation into the current situation. As a result, he said he hoped Gazprom would change its policy towards Lithuania.

Sekmokas claims that Lithuania is being punished for attempting to promote competition in the gas sector and to reduce dependence on a single gas supplier.

 

Background

The liberalisation of European gas and electricity markets aims to give consumers the chance to freely choose their supplier and shop around for the best deals (see EurActiv LinksDossier on the 'Liberalisation of the EU gas sector'). However, there have been few new entrants to the market and most households and businesses still lack a real choice of supplier.

In May 2006, the European Commission conducted a series of surprise inspections of the offices of large European companies - including E.ON, RWE, Gaz de France, Distrigas and OMV - on the suspicion that they were restricting competitors' access to pipelines and gas storage facilities and engaged in 'market-sharing' practices.

the findings persuaded the EU executive to propose a third energy liberalisation package, tabled in September 2007. A compromise deal on the legislative package was struck on 23 March 2009. But some voices are warning that the gas sector must be treated with extra caution as the current proposals are causing tensions with Europe's largest supplier, Russia.

Lithuania, a former Soviet republic and an EU member since 2004, is highly dependent on energy imports from Russia. The country recently shut down its nuclear power plant in Ignalina, raising fears of even greater energy dependency on Russia.

Last August, Gazprom warned Lithuania to abandon on plans to unbundle the gas sector, as according to the gas giant doing so would hurt its investment in the country.

Timeline

Further Reading