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Gazprom Offer to Lithuania ‘Unacceptable,’ Grybauskaite Says

Feb. 25 (Bloomberg) -- OAO Gazprom is offering Lithuania unacceptable terms in return for lower gas prices, President Dalia Grybauskaite said, suggesting the Russian export monopoly wants the government to drop arbitration proceedings.

The Lithuanian government expects to complete its “cost-benefit analysis” of the proposal next week, Prime Minister Algirdas Butkevicius said in an e-mailed statement. The price Gazprom offered for gas supplies is “the lowest in the period of negotiations,” he said.

Lithuania, which relies on Gazprom for all of its natural gas, is battling to cut prices it says are at least a quarter more than other European buyers pay. Talks moved forward after Butkevicius got a pledge for a price cut from Gazprom Chief Executive Office Alexey Miller in a meeting in Sochi on Feb. 7.

Still, the full proposal “in writing is different from what’s been offered in words,” and the Gazprom package “doesn’t satisfy the interest of Lithuania and its people,” Grybauskaite said in an e-mailed statement. “Given the current Lithuanian position that includes our arbitration case against Gazprom and the construction of a natural-gas terminal, we cannot accept unfavorable conditions for Lithuania.”

Lithuania is building an LNG terminal on the Baltic sea that will begin operation in December. Alternative gas supplies aimed at taming Russian dominance over its energy industry.

The Russian exporter offered price cuts for a three-year period in a deal that included measures concerning Lithuania’s arbitration proceedings against it in Stockholm and a legal requirement for Gazprom to divest its 37 percent stake in grid operator Amber Grid, Grybauskaite said, according to the Baltic News Service.

“The price discount comes at our expense,” the BNS cited Grybauskaite as saying. She urged the prime minister to continue talks with the Russian company.

Lithuania is suing Gazprom in Stockholm for more than 4 billion litai ($1.59 billion) the state says it was overcharged.

To contact the reporter on this story: Milda Seputyte in Vilnius at mseputyte@bloomberg.net

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

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