Lithuania votes in EU reform faulted by Russia's Gazprom

30th June 2011, Comments 0 comments

Lithuanian lawmakers approved on Thursday an EU-piloted gas market reform which has sparked a politically charged war of words between the Baltic state and Russian giant Gazprom, its sole supplier.

Eighty-one members of parliament backed the shake up, with 23 against and seven abstentions.

The new law brings Lithuania into line with European Union rules on "unbundling" countries' gas systems -- barring bulk suppliers from also managing the gas mains' system for consumers -- which are meant to boost competition and ensure that big players cannot skew the market.

Prime Minister Andrius Kubilius the shake up should help make Lithuania's gas cheaper.

"We can foresee the possibility of being able in the long term to get our gas at lower prices," he said after the vote.

Lithuania, a nation of three million, is seeking to cut its dependence on energy from Russia which is a legacy of its five decades as a Soviet republic before the communist bloc collapsed in 1991.

Lithuania has accused Gazprom of unfair pricing and political strongarming, and in January filed a complaint against the Russian group with EU competition authorities. Gazprom has denied the claim that it is abusing its clout.

The reform, not due to come into force until 2013, is a direct challenge to Gazprom because it is not only Lithuania's supplier but also owns over a third of national gas distributor Lietuvos Dujos.

In 2004, the year Lithuania joined the EU, Gazprom signed a contract giving it a 37.1-percent stake in Lietuvos Dujos.

Gazprom and another major Lietuvos Dujos player -- E.ON Ruhrgas International from EU member Germany, which owns 38.9 percent -- pressed Vilnius to seek an exemption from Brussels' requirements.

But the Lithuanian government, which holds 17.7 percent of Lietuvos Dujos, refused.

Energy Minister Arvydas Sekmokas said Thursday that the reform would strengthen Vilnius' hand and vowed to negotiate a 15-percent cut in bulk gas prices in talks with Gazprom.

Lithuania is also planning to build a liquefied natural gas terminal on its coast in a bid to diversify suppliers.

© 2011 AFP

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