Lithuanian Premier Accuses Russia of ‘Economic War’

(Corrects spelling of premier in headline.)

Lithuanian Prime Minister Algirdas Butkevicius accused Russia of waging “economic war,” citing trade curbs imposed by its eastern neighbor and demands from Russia’s state-run natural-gas exporter.

Russia forced customs controls on Lithuania, located at Poland’s northern border along the Baltic Sea, while the eastern European Union state is studying a proposal it received from Gazprom OAO (GAZP) last week, the contents of which aren’t public.

“This could almost be considered a sort of economic war,” Butkevicius said today on Ziniu radio in Vilnius.

Political leaders in the Baltic nation that broke from the Soviet Union more than two decades ago are increasingly vocal about disputes with Russia as they seek energy independence while trying to maintain trade links. The EU yesterday urged Russia to stop targeting Lithuania, which currently holds the EU presidency, with punitive trade restrictions.

President Dalia Grybauskaite told reporters today that Gazprom is demanding the government “do things that can’t be done” and won’t consider reducing prices for the gas it sells Lithuania as the country’s sole supplier, BNS newswire reported.

Gazprom is acting within a supply contract that is valid through 2015, a Gazprom official said, declining to be identified in line with company policy or comment further on the remarks from Lithuania today.

Energy ministers from the 28-nation EU gather in Vilnius today and tomorrow to discuss energy security and other issues. An antitrust probe that the EU is conducting against Gazprom will probably be debated, according to Lithuania’s Energy Ministry.

Vilnius Meeting

EU Energy Commissioner Guenther Oettinger is due to attend the meeting. During a visit to Vilnius in May, Oettinger said the EU backs Lithuania’s efforts to get cheaper Russian gas and develop alternative energy supplies and production.

“It’s not acceptable that in Lithuania energy prices are 20, 30 or 40 percent higher than in neighboring states,” the commissioner said. The country’s work to build a liquefied natural-gas terminal on the Baltic Sea coast by the end of 2014 will strengthen its negotiating position with Gazprom, he said.

“I invite the government to speed up construction of the LNG terminal and try to reduce dependence on Gazprom as fast as possible,” the president said, according to BNS.

Butkevicius, pledging to coordinate any formal response to Gazprom with Grybauskaite, said he still hoped Gazprom would agree to reduce prices before the winter heating season.

“I hope that sober thinking will prevail,” he said.

To contact the reporter on this story: Bryan Bradley in Vilnius at bbradley13@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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