Gazprom Keeps Promise, Sends Lithuania Proposals on Gas

Gazprom CEO Alexei Miller has kept his promise to Lithuanian PM Algirdas Butkevicius during their informal talks at the Sochi Olympics to submit Lithuania written proposals on the price of Russian gas and terms of supply among other things.

“Yes, we received Gazprom’s proposals... I saw those documents.  But I have not read them yet. The price is the same as I was told (by Alexei Miller) it would be,” the Lithuanian PM told reporters last Friday.

Butkevicius earlier this month neither confirmed nor denied that Miller in Sochi had offered a discount of over 20% for Lithuania-bound gas.

Last Friday the PM declined to confirm if this reflects in the Gazprom proposals.

He nevertheless admitted that the five key proposals include not only the price of Gazprom gas and terms of supply, but also natural gas transit to Russia’s Baltic exclave of Kaliningrad, the EU’s Third Energy Package that foresees unbundling gas supply and management, the Russian company’s shareholdings in Amber Grid, a spinoff company of Lietuvos Dujos (Lithuanian Gas), in Lietuvos Dujos and some other minor issues.

When pressed on details, the government head refused to go into them, noting that there were five of them in total.

He insisted he first expects to receive their evaluations from relevant experts. The PM said however he will introduce the proposals to Lithuanian President Dalia Grybauskaite as early as the beginning of the week.

 “It is not only the gas price we can reach agreement on. This will also depend on a number of other negotiating issues, such as gas transit to Kaliningrad, the Third Energy Package, shares in Amber Grid and shares in Lietuvos Dujos. There are five important issues or even more that need to be negotiated,” he emphasized.

Experts agree that the mutual dialogue, rekindled after the stalemate in the negotiations between the sides, marks a softening in Gazprom’s position towards to Lithuania.

Last week, before a visit to South Korea where a christening of Lithuania’s LNG terminal-vessel took place, the Lithuanian President explained the thaw in relations by the looming arrival of the LNG vessel, expected in the Lithuanian coastal water in the fall.

In the Sochi meeting, the PM and Gazprom CEO were said to have agreed on Gazprom’s pullout from the management of Lithuania’s gas transmission operator, Amber Grid, by November.

The pullout of Gazprom from the Amber Grid management would mean a reversal in the Russian Government’s staunch opposition against the EU Third Energy Package.

Last week some unofficial sources in the Government hinted Gazprom agreed to stay in the company as a financial investor. It is not clear for now what E.ON, the other major shareholder, intends to approve that.

The Lithuanian PM did not either comment whether Gazprom asked Lithuania, in exchange for a better price, to dump its lawsuit in a Stockholm arbitration court where the Baltic country seeks to get back $2 billion of claimed overcharges.

However Butkevicius confirmed that the possibility of signing “an amicable mutual agreement” had been discussed.

Gazprom has also raised the issue of gas transit to the Russian exclave of Kaliningrad, and wants Lithuania to sign an inter-governmental, 10-year gas supply agreement. However, the Lithuanian government does not agree to that and proposes that a commercial contract between two companies be signed.

Gazprom gas price for Lithuania is 13% higher than for Estonia and 20% higher than Latvia.