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Charles Kennedy

Charles Kennedy

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Lithuania Files Second Lawsuit Against Gazprom

Majority shareholders of Lithuanian utility Lietuvos Dujos are 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.

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.

Related article: Sakhalin Energy Reserves Russian Calling Card for Improved Japanese Ties

When it took office in December 2012, the new Lithuanian government was hoping negotiations—which ended up lasting a year—would work to convince Russia to lower gas prices. Those negotiations failed, prompting the lawsuits.

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.

Related article: Shell, Gazprom Neft Eye Siberia’s Bazhenov as Next Bakken

Earlier last year, the Lithuanian government had filed another case against Gazprom before the international arbitration court in Stockholm, seeking compensation of $2 billion for past pricing.

The European Commission has been investigating Gazprom since September 2012 on suspected anti-competitive behavior, including overcharging customers and blocking rival suppliers.

Gazprom is currently the only supplier of natural gas to Lithuania, which is scrambling to diversify supplies, including plans for a floating liquefied natural-gas terminal on the Baltic Sea, which should be operational by the end of this year, and a potential pipeline with neighboring Poland.

By. Charles Kennedy of Oilprice.com


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