Baltic States – CIS, Energy, Gas, Investments, Legislation, Lithuania

Virgis Valentinavicius, adviser to the prime minister, told reporters on Friday that the lawyers of the Energy Ministry were analyzing the letter of Gazprom and formulating the Government's position, writes ELTA/LETA.

As reported, after Lithuania started applying methodology for estimating heating prices to the Kaunas heat and power plant (KTE), the Russian gas concern Gazprom launched an investment dispute. Prime Minister Andrius Kubilius was informed that price regulation caused losses of hundreds of millions to the company.

Gazprom proposes the Lithuanian Government to solve the dispute peacefully by paying the group for the damages suffered.

If Lithuania continues ignoring international commitments under the agreement with the Russian Federation on protection of investments, Gazprom will be forced to resort to arbitrage, reads the letter to the prime minister.

According to Deputy Chairman of the Gazprom Board Valery Golubev, under the agreement on the purchase of Kaunas power plant in 2003, Gazprom undertook to maintain the heating prices for a period of years, and later, starting from 2008, calculate the prices in accordance to a formula linked to the change of oil prices in European markets. Gazprom estimates that in 2003-2008 alone, the Russian gas concern lost around 342.22 million litas (99.07 million euros) due to the adjustment of heating prices, and the amount has been increasing every year.