Kubilius: LNG Quota Necessary to Ensure Gazprom "Shackles" Broken

Lithuanian customers will still remain shackled to Gazprom supply and prices unless at least 25 per cent of its gas needs are supplied through the Klapeida LNG terminal, the Lithuanian Prime Minister has warned.

Prime Minister Andrius Kubilius was speaking in light of a new proposal on Lithuania's books. This proposal, if incorrectly implemented, could mean Gazprom still retains a majority market share in Lithuania, the PM said.

"The gas terminal can operate and supply cheaper gas from Qatar, Norway or the United States if it is agreed that we will no longer buy 100 per cent of gas from Gazprom," the Lithuania Tribune reports the minister as saying.

"Unless 25 percent of the gas quota is provided through the LNG terminal, the largest gas customers in Lithuania will be shackled to Gazprom with long-term supply contracts and the terminal is reduced to a useless scrap metal pile. Preserving the Gazprom monopoly means that nothing will change and Lithuanians will continue to be forced to pay more for gas than the Germans."

A proposal now before the Lithuanian parliament plans to implement a mandatory supply clause into law, which would mean that 25 per cent of Lithuania's supply would have to come from the Klapeida terminal.

Earlier this year, Lithuanian terminal company Klapeidos Nafta signed a $500 million ten-year agreement with Norway's Höegh LNG. Höegh plans to begin construction on the Port of Klapeida LNG terminal in the second half of 2014.