Lithuania green lights EU unbundling for gas market

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Lithuania's government on Monday gave the green light for the plan to "unbundle" Lithuania's natural gas system in line with EU rules despite the objections of Russia's Gazprom.

Lithuania said Monday was impossible to meet Gazprom's demands for Vilnius to exempt itself from EU competition rules on "unbundling" which order the separation of companies delivering a bulk commodity to a given country from those supplying it to individual consumers on the domestic market.

Currently Gazprom is Lithuania's sole gas supplier and also has a 37.1 percent share in Lithuania's distributor Lietuvos Dujos. Germany's E.ON Ruhrgas International is another major stakeholder with 38.9 percent while the Lithuanian state controls 17.7 percent.

Both the Russians and Germans have repeatedly asked Lithuania to exempt itself from EU competition regulations on debundling. Such a move would allow Gazprom to remain both a bulk supplier and network distributor.

The European Commission has however revealed that Lithuania, unlike fellow EU Baltic states of Latvia and Estonia, has not applied for an exemption.

"The wording (...) makes it clear that it applies to Finland, Estonia and Latvia only," European Commission official Heinz Hilbrecht said in a letter to the Lithuanian government seen by AFP on Monday.

Russia's Prime Minister Vladimir Putin has repeatedly slammed EU gas market liberalisation plans, warning that letting smaller players participate in gas pipelines might threaten security of deliveries and lead to price hikes. On Friday he termed Lithuania's plans to push ahead with debundling "robbery".

"Our companies, together with German partners, legally acquired distribution assets in Lithuania (...) What is this? What kind of robbery is this?," Putin said Friday in Germany.

Lithuania's Prime Minister Andrius Kubilius on Monday refused to comment on Putin's statement.

In August, however, Kubilius was blunt: "When the (EU debundling) directive is implemented, Lithuanian consumers will have the possibility to get rid of the monopolistic Gazprom gas supply."

Lithuania, a nation of 3.3 million that joined the EU in 2004, is seeking to cut its dependence on supplies from Russia, a legacy of its five decades as a Soviet republic before the communist bloc collapsed in 1991.

Lithuania's gas arrives via a Gazprom pipeline across Belarus which has been hit by feuds between Moscow and Minsk in recent years.

In June, its supplies fell by more than 40 percent amid a row between Belarus and Russia over gas payments and transit fees.

© 2010 AFP

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