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Lithuania Regulates Shale-Gas Work, Chevron Tender Advances

Sept. 16 (Bloomberg) -- Lithuania strengthened environmental restrictions for using shale-gas and shale-oil technologies as a state body recommended the Baltic country issue a first license for such work to Chevron Corp.

New regulations, among other things, require an environmental impact study and public consultations before exploration can start, the Environment Ministry in Vilnius said on its website. It said a tender commission today suggested the government grant rights to the U.S. energy company’s local unit because “legally no other decision is possible.”

Chevron submitted the only bid in a January tender for shale-hydrocarbon exploration and production rights in the western Lithuanian region of Silute-Taurage. The country wants to develop shale resources as an alternative to energy imports from Russia. Some local communities oppose the technology as environmentally unsafe.

“Chevron hopes that its work helping Lithuania find and utilize hydrocarbon resources will facilitate the country’s goal of energy security,” Chevron Exploration & Production Lietuva UAB said of the tender commission’s decision in a statement on ELTA news service.

Once the government names Chevron the winner of the tender, the company will have 30 days to pay the price it offered for the license and confirm it’s still interested, Environment Minister Valentinas Mazuronis said in an interview on Sept. 5.

Lithuania plans to revise a law that currently taxes proceeds from shale-gas production at a rate of 25 percent, news portal Vz.lt cited Mazuronis as saying today. The minister said a 40 percent tariff proposed to parliament was too high and the government would seek a compromise somewhere between that and the current rate, Vz.lt reported.

Chevron last year bought half of the Lithuanian oil and gas recovery company LL Investicijos, which holds a license to explore in Rietavas, an area contiguous to the Silute-Taurage block, according to the company’s Lithuanian website.

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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