Lithuania Wants Dujos to Seek Price Arbitration Against Gazprom
The Lithuanian Energy Ministry wants gas utility Lietuvos Dujos AB to join the state in arbitration proceedings against OAO Gazprom (OGZD) to force the Russian gas monopoly to reduce prices under a 1999 contract.
Dujos shareholders will meet Jan. 30 to vote on the proposed litigation, the Vilnius-based company said today in a regulatory statement. The ministry holds 18 percent of Dujos, Gazprom has 37 percent and EON SE owns 39 percent. Talks with the Russian utility, which began last year, have yet to yield an agreement on price cuts.
“Proceedings shall be suspended in case of reaching a favorable commercial agreement,” the company said in the statement.
Lithuania, which relies on Gazprom for all its natural gas, is battling to reduce prices it says are at least a quarter more than other European buyers pay. The state is suing Gazprom in a Stockholm arbitration court for 5 billion litai ($2 billion) of claimed overcharges, after initiating a European Union antitrust probe, and is building a liquefied natural-gas terminal for access to alternative supplies.
Russia’s Ambassador to Lithuania Alexander Udaltsov said he would step up meetings between the government and the Russian gas supplier to settle conflicts.
“I do not want to usurp Gazprom’s right to negotiate,” Udaltsov told reporters today after meeting Lithuanian Prime Minister Algirdas Butkevicius, according to the BNS newswire. “This is a very specific issue. The Lithuanian energy minister and I have already met and talked about this. I have undertaken to accelerate a high-level meeting to discuss these issues.”
The LNG terminal, which Lithuania plans to have working by December, will allow the country to “very seriously consider” not renewing or replacing the supply agreement with Gazprom, which expires in late 2015, President Dalia Grybauskaite said in an interview in this month’s issue of IQ magazine.
The terms of the 1999 contract are the basis for the new arbitration proceedings that the Energy Ministry, exercising its rights as a shareholder, is asking Dujos shareholders to approve, according to today’s statement.
Lietuvos Dujos shares were unchanged at 0.645 euro after the announcement as of 12:15 p.m. in Vilnius. Gazprom shares in London retreated from gains of as much as 1.3 percent and were up 0.8 percent at $8.37, data compiled by Bloomberg showed.
High gas prices are holding back Lithuania’s economy, which uses the fuel intensely for power generation, heat, and manufacturing, Prime Minister Algirdas Butkevicius said in an interview in September.
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