INTERVIEW-Lithuania aims to resolve disputes with Gazprom-minister

Fri Jan 11, 2013 11:56am GMT

Quotes

   

* Eyes gas link to Poland by end-2017

* New energy strategy expected in May

* Gazprom to remain key gas supplier

By Nerijus Adomaitis

OSLO, Jan 11 (Reuters) - The new energy minister of the small Baltic state of Lithuania wants talks to ease a confrontation with Russian gas giant Gazprom but will stick to European Union plans for gas market deregulation which have angered Moscow.

Jaroslav Neverovic, who became energy minister in December, said the problems could be resolved around the negotiating table, a change in tone to the more forceful rhetoric of the previous centre-right Lithuanian government.

"We want to solve all disputes and we see a possibility of doing that, because Gazprom has demonstrated a constructive approach during our first meeting," Neverovic told Reuters in a telephone interview from Lithuania's capital city Vilnius.

He was referring to a meeting with Alexander Medvedev, the head of Gazprom's export arm, in December.

The government has said it plans to have more talks with Gazprom in January, but no dates have been set yet.

"We have to be realistic and understand that even when competition is introduced to the market, Gazprom is going to remain the key gas supplier," Neverovic said, referring to plans for a liquefied natural gas (LNG) terminal to ease Lithuania's dependence on gas from Russia, which ruled the Baltic state until 1990 but still supplies Lithuania with all its gas needs.

DEREGULATION

Lithuania angered Russia by deciding, in accordance with EU guidance, to separate gas supply and transportation of gas utility Lietuvos Dujos, majority controlled by Gazprom and Germany's E.ON.

Gazprom took Lithuania to an international arbitration court in Stockholm, though it eventually acquiesced to the market restructure.

Lithuania has in turn launched a 5 billion litas ($1.9 billion) claim at the Stockholm international arbitrage court for Gazprom allegedly overcharging it for gas.

"All arbitration questions will be dealt with as a part of negotiations," Neverovic said.

Gazprom also faces pressure from the European Commission, which has launched an investigation into suspected anti-competitive market practices.

Despite his readiness to talk, Neverovic said unbundling remained a key tool to free up the market.

Gazprom is also facing potential competition from LNG as Lithuania tries to diversify supplies by building a 2-3 billion cubic metres per year import terminal by the end of 2014.

The Baltic state is also eyeing a gas link to its neighbour Poland, which also plans to start LNG imports in the second half of 2014 and is exploring for shale gas.

The minister said the planned gas link to Poland could be in place by the end of 2017, and that he would travel to Warsaw this month to push for the project.

Warsaw-educated Neverovic was delegated to the coalition cabinet by a junior partner, a party of ethnic Poles in Lithuania, and he is therefore seen by the Lithuanian media as the right person to improve energy cooperation with Poland.

Polish and Lithuanian gas companies have estimated the 562 kilometre link of 2.3 billion cubic metres of annual capacity could cost 471 million euros ($622.36 million). A feasibility study is expected to be ready in the first quarter of 2013.

Neverovic said plans for a regional nuclear power plant, blocked by a referendum last year, could be resurrected this year in a new energy strategy due to be presented in May.

The previous plan had involved buying a reactor from Japan's Hitachi Ltd and investment from Estonia and Latvia.

"If we reach an agreement between all political parties that we need to solve our dependence on energy imports, then nuclear power is one of possible scenarios which we would seriously consider," he said. ($1 = 2.6473 Lithuanian litas) ($1 = 0.7568 euros) (Editing by James Jukwey)