Spirit of Sochi: Gazprom Softens Stance on Lithuania
While Lithuanian President Dalia Grybauskaite seeking re-election snubbed the Sochi Olympics, the Social Democrat Lithuanian Prime Minister Algirdas Butkevicius has already reaped the benefits from his meeting with Gazprom CEO Alexey Miller.
“We have effectively agreed on the implementation of the EU Third Energy Package, which foresees Gazprom’s pullout from the management of Lithuania’s gas transmission operator, Amber Grid, by this year’s November,” Butkevicius said.
Owners of Amber Grid, a spinoff of Lietuvos Dujos (Lithuanian Gas), Lithuania’s gas import and supply company, are Gazpom, Germany’s E.ON Ruhrgas and Lithuania’s Energy Ministry.
They hold respectively 37.1% 38.9 % and 17.7 % of shares both in Lietuvos Dujos and Amber Grid. But E.ON recently announced of withdrawing from the Baltics.
The pullout of Gazprom from the Amber Grid management would mean a reversal in the Russian Government’s staunch opposition against the Third Energy Package.
Just in late October last year, Russia’s PM Dmitry Medvedev reproached Butkevicius for the ongoing gas sector reforms in Lithuania and emphasized the methods Lithuania had chosen (to implement the Package) “violated the interests of Russian investors and ran counter to bilateral intergovernmental agreements” and Gazprom will not bow to the pressure.
Furthermore, the agreement is unexpected in the wake of a recent AB Lietuvos Dujos shareholders’ extraordinary meeting in which they, except Gazprom, unanimously voted in favor of a resolution authorizing the Lithuanian gas company to initiate arbitration proceedings against Gazprom with the aim to decrease the exorbitant gas price - $479/1000m³ under the current agreement, which expires on 31 January, 2013.
Gazprom gas price for Lithuania is 13% higher than for Estonia and 20% higher than for Latvia.
The Lithuanian Energy Ministry supported the proposal, arguing that Lietuvos Dujos could not reach an agreement on a new gas supply contract with the Russian gas supply giant during the negotiations.
The Baltic state, which relies 90% on Gazprom gas, is also embroiled with Gazprom in a Stockholm arbitration court where Lithuania seeks to get back $2 billion of claimed overcharges.
Against the backdrop, most Lithuanian Social Democrats were praising their leader’s farsightedness in politics, diplomacy and flexibility; some, however, cautioned that the agreement in a formal setting of the Sochi Olympics is yet-to-be-sealed.
Meanwhile, the opposition that failed to strike an accord with Gazprom during the years in power through 2008-2012 seemed to be mostly speechless after the news.
“The opposition will always support agreements that are wise, transparent and useful to Lithuania not only in a short-term, but in a long-term, too. Sure, this will happen if the losses of nearly $2 billion, incurred as a result of the unilaterally changed formula of gas supply, will not be forgotten and compensated along the road. I really hope that Algirdas Butkevicius is talking namely about this kind of proposal,” Dainius Kreivys, an influential Conservative legislator and ex-Economy minister in the 2008-2012 Conservatives-led government, told Natural Gas Europe.
However, the Lithuanian PM is convinced that the Gazprom CEO will stay by his words after he returns from Sochi to Moscow.
“As we have had very long, hard and kind of matter-of-fact negotiations in a friendly environment and reviewed all what had been spoken about previously, I can today boldly state that the issues of the Third Energy Package was closed during the negotiations. And I conclude this after the principal issues have been resolved” Butkevicius insisted.
He also acknowledged that he had also discussed with Gazprom’s Miller prices of gas supply to Lithuania, but gave no details as to what exactly both of them agreed on.
“We have to move toward one or another solution. I heard a proposal. In my opinion, this is a good proposal,” Butkevicius summed tersely.
He said he will inform Lithuania’s President Dalia Grybauskaite and the public about Gazprom’s proposals upon arrival to Lithuania.
The issue of Gazprom’s requirement for Lithuania to guarantee gas transit to the Russian exclave of Kaliningrad also was brought up during the meeting.
“This is their wish, but we all have a different opinion. Certain options were laid out, but we told them how we see things and they replied that such an option can be considered as well,” Lithuanian PM said.
An Energy minister-led working group that is negotiating with Gazprom will hold a meeting with the Russian gas giant in the near future.
“I also asked Gazprom CEO that the next round of talks be held swiftly, not with an interval of several months between the meetings,” Lithuanian PM emphasized.