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James Burgess

James Burgess

James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…

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Lithuania Asks US to Expedite Gas Exports

Lithuania Asks US to Expedite Gas Exports

Lithuania's energy minister has joined Central European calls for Washington to expedite approval for US natural gas exports to Europe to reduce dependence on Russia.

In a statement last week to the US Senate, Lithuanian Energy Minister Jaroslav Neverovic said his country was paying a “political price” for its dependency on Russian gas, and urged members of the Senate to use their power to release natural gas resources into the world market.

"A law enacted in your country some 75 years ago denies us access to your abundant and affordably priced energy resources," Neverovic said.

Related Article: Lithuania Files Second Lawsuit Against Gazprom

Following the crisis in Ukraine, which culminated in Russia’s annexation of the Crimean Peninsula earlier this month, Central European countries have stepped up their calls for the US to speed up the process of exporting liquefied natural gas (LNG) to countries that do not have free-trade agreements (FTAs) with the United States.

Earlier this month, the Visegrad 4—Poland, the Czech Republic, Hungary and Slovakia—began more heavily lobbying the US to ease restrictions on natural gas exports to help them diversify supplies.

Gas prices to Lithuania are among the highest in the European Union, with Gazprom deliveries to the country charged at about $470-$480 per cubic meter, compared with the European average of $380 per cubic meter.

Last month, the majority shareholders of Lithuanian utility Lietuvos Dujos announced they were preparing to file a second lawsuit against Russian gas giant Gazprom over unfair gas prices.

The lawsuit follows a similar one filed against Gazprom in October by the Lithuanian government seeking a total of $1.9 billion for overcharging of gas supplies since 2004.

When it took office in December 2012, the new Lithuanian government was hoping the year-long negotiations would end in lower gas prices, but failed results led to lawsuits instead.

Related Article: A U.S.-Saudi Move to Lower Oil Prices?

The filing of the second lawsuit against Gazprom was prompted by the Lithuanian Ministry of Energy, which holds a 17.7% stake in the Lietuvos Dujos utility. The government was supported in its decision by other key shareholders, including the largest, Germany’s E.ON, which holds a 38.9% stake. Gazprom, which holds a 37.1% stake in the utility, voted against the measure.

According to Gazprom, the Lithuanian utility agreed to pay prices based on Gazprom’s formula, which is linked to oil prices. The Russian gas giant remains adamant that it will not change its pricing practices in Eastern Europe despite growing regulatory pressure emanating from the European Union. The current sale agreement is in place until the end of 2015.

While Gazprom is currently Lithuania’s only gas supplier, the country is working on diversification plans, which include a floating LNG terminal on the Baltic Sea, which should be operational by the end of this year, and a potential pipeline with neighboring Poland.

By James Burgess of Oilprice.com




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