Baltic States – CIS, Energy, Gas, Lithuania

Prices charged by Gazprom violate an agreement made when Lithuania's gas utility Lietuvos Dujos was privatized and Lithuania wants to have talks on the matter, Energy Minister Arvydas Sekmokas told a briefing.

Gazprom and Germany's E.ON Ruhrgas respectively own 37.1 and 38.9% stakes in Lietuvos Dujos, while Lithuania's government has 17.7%, reports LETA/ELTA, referring to Reuters.

"We have proof that Gazprom has violated the privatization deal... by setting an unfair gas price. We propose to start talks to correct this," Sekmokas told journalists, but did not elaborate.

He did not elaborate, saying what constituted a fair price was a matter for technical experts.

Sekmokas warned that unless Gazprom negotiated new prices within 60 days Lithuania would seek international arbitration.The minister said Lithuania would go to the international arbitrage in Stockholm to cancel the privatization deal.

The Energy ministry said in a statement Gazprom, the sole supplier of natural gas to the Baltic state, was putting" political and economic pressure" on the government.

As the ministry said in its statement: "Gazprom is discriminating against Lithuania's natural gas consumers and putting political and economic pressure on the government."

Gazprom, Lithuania's sole gas supplier, signed a contract with the Baltic state in 2004 that gave it a one-third stake in Lithuania's gas distributor Lietuvos Dujos.

Gazprom and the Lithuanian government have for months been locked in a war of words over the Baltic state's gas market reforms, which fall under new European Union rules that came into force Thursday.

In January, Lithuania said it had asked the European Commission to probe what it alleged was Gazprom's abuse of its market clout.

The Brussels-based Commission is the executive body of the 27-nation EU and polices its trade and competition rules – and has powers to impose huge fines in the case of breaches.

Gazprom has rejected Lithuania's allegations.

The battle has centered on Lithuania's drive to respect EU energy market reform rules by "unbundling" the country's gas system, separating bulk supply from that piped to consumers.

Gazprom and another major Lietuvos Dujos stakeholder – E.ON Ruhrgas International from EU member Germany – have pressed Lithuania to ask Brussels for an exemption from gas market reform rules but Vilnius has refused.

Gazprom has reportedly said it would deny Lithuania gas discounts offered to neighboring nations unless Vilnius fell into line.