Gazprom Compromises To Avoid Losing Business

- Advertisement -

The Lithuanian Energy Ministry said on 30 January that shareholders of the Baltic state’s gas utility Lietuvos Dujos voted to initiate arbitration against Russian gas monopoly Gazprom in order to lower too high gas prices.

“Gazprom supplied gas price for AB Lietuvos Dujos is significantly higher than in Latvia’s, Estonia’s or Germany’s markets. This is harmful for our customers, for our economy and also for the company AB Lietuvos Dujos, which is actually losing customers and gas consumption is being significantly reduced because of such prices,” the energy ministry said.

The decision to initiate arbitration was proposed by Lithuanian government, which holds 17.7% of Lietuvos Dujos. Germany’s E.ON owns 38.9% and Gazprom, the only gas supplier to Lithuania, has 37.1%.

The Lithuanian company announced earlier in January through the Vilnius Stock Exchange Information Network that its shareholders would consider on 30 January the Lithuanian Energy Ministry’s proposal to initiate arbitration proceedings against Gazprom. “The arbitration proceedings will be ceased if the company reaches an amicable contract with Gazprom, which will be approved by the board of directors,” the statement read.

Greece is also seeking lower gas prices from Gazprom but so far has avoided arbitration given that it is a lengthy procedure. The Russian company and Greece’s Public Gas Corporation (DEPA) are currently holding discussions on the cost of natural gas.

“So far, Gazprom appears to have compromised on prices only with those buyers that have real alternatives to Russian gas,” Julian Lee, senior energy analyst at London’s Centre for Global Energy Studies (CGES), told New Europe on 31 January. “Both Greece and Lithuania have the prospect of future alternatives, either in the form of piped gas from Azerbaijan, or as LNG (liquefied natural gas), but the competition may not yet be strong enough for Gazprom to make concessions easily,” he added.

Lee noted that the fact that expected LNG exports to the United States have not materialised because of the surge in its domestic production of shale gas have already put pressure on Gazprom. The start of US LNG exports in the next couple of years can only increase that pressure, he added.

In Brussels, Greece’s Prime Minister Antonis Samaras brought up the issue of the high cost of natural gas in a bilateral meeting with Russian President Vladimir Putin. The Greek government is thought to have ordered DEPA officials to reject any price of more than $400 per 1,000 cubic metres.

Samaras argued that Greece could not afford to keep paying natural gas prices that are about 30% above the European average. “My country is currently coming out of a six-year recession and low energy prices from Russia are crucial to our recovery,” he said.

Gazprom last year pulled out of a bid at the last minute for DEPA. One of the reasons, officials said at the time, was the European Commission’s “objections” to the sale that would give Gazprom a strong hold in the Mediterranean state’s energy market.

The Commission launched an antitrust probe against Gazprom in September 2012. The Russian gas giant said two weeks ago it would defend itself against accusations it had abused its dominant market position.

follow on twitter @energyinsider

 

- Advertisement -

Subscribe to our newsletter

Co-founder / Director of Energy & Climate Policy and Security at NE Global Media

Latest

Zeno’s Arrow and Albania’s membership in the EU

Recently, the position of the incoming German government coalition...

On the two-year anniversary, G7 Foreign Ministers address the devastating war in Sudan

After nearly 23 months of war, on March 21,...

Doom, gloom or boom?

While it is an almost painful daily task to...

Don't miss

Zeno’s Arrow and Albania’s membership in the EU

Recently, the position of the incoming German government coalition...

On the two-year anniversary, G7 Foreign Ministers address the devastating war in Sudan

After nearly 23 months of war, on March 21,...

Doom, gloom or boom?

While it is an almost painful daily task to...

Romania utilizing all available resources to boost its energy independence

Romania is using all energy resources available, including natural gas as the country advances rapidly with Neptun Deep gas project and new wind and...

Apollo Funds to partner with BP on TANAP gas pipeline from Azerbaijan to Turkey

British energy company BP said on March 21 it has reached agreements for Apollo-managed funds to purchase a 25 percent non-controlling stake in BP...

Caspian-Black Sea Green Energy Corridor countries push project forward

The Ministers of Azerbaijan, Georgia, Hungary and Romania met in Budapest on March 10, where they signed a joint letter to EU Energy Commissioner...

EU signs critical raw materials, energy and infrastructure deals with Kazakhstan

As part of the visit of EU Commissioner for International Partnerships Jozef Síkela to Astana, the European Union and Kazakhstan signed on March 13...

Weaning Europe off its Russian gas addiction

The Viking hero Ragnar Lodbrok once said “don't waste your time looking back. You're not going that way.” The words of the former king...

EU-Kazakhstan boost cooperation in energy, raw materials, transport, sustainability

The European Union and Kazakhstan have discussed at a meeting in Brussels the successful implementation of the Memorandum of Understanding between the Central Asian...

Tashkent’s busy diplomatic agenda

In the coming months, Uzbekistan will host high-profile summits between Central Asia with the European Union and the Gulf Cooperation Council. As global geopolitics...

Tajikistan: The Battle for Middle Earth’s Resources

Tajikistan is a small land-locked country tucked away in southeast Central Asia. Its capital, Dushanbe, is almost equally distant, at approximately 4,500 kilometers, from...