You're reading: Gazprom says to take Lithuania to court, will win

Gazprom intends to take the Lithuanian government to court over the situation with the country's gas importer and pipeline operator Lietuvos Dujos, and expects to win, the Russian gas giant's deputy CEO, Valery Golubev, told reporters.

Lithuania’s Energy Ministry thinks Gazprom has breached an agreement on the privatization of Lietuvos Dujos, in which Gazprom owns 37.06% of the shares, as it has supplied gas to the republic not "at fair prices."

"We’ll go to court, and they’ll lose. They’ll lose in any court. There’s been no breach of obligations [by Gazprom]. The Lithuanian government approved the price formula in 2008, before the Third Energy Package came in. We haven’t done anything to put Lithuania in a worse position in 2009 and 2010," Golubev said.

At the same time, he said Lithuania has violated its own commitments by not taking up contract gas volumes."

"Lithuania also pledged not to regulate the gas market if the Lietuvos Dujos mark-up does not exceed 15 percent, but in actual fact the market is being regulated," he said.

"As for the Lithuanian Republic’s expectations that we ought to lower prices for them – why should we?" Golubev said. The contract with Ukraine is unchanged and the price formula written into that is not being reviewed, he said.

Golubev said Gazprom had not imposed penalties on Lithuania for not taking up all contract gas volumes, although it was entitled to. "We haven’t taken any steps that might have made things worse for Lithuanian consumers," he said.

He also said Lietuvos Dujos recently commissioned a compressor station in Janiunai, which he described as "the heart of the Lithuanian gas system," but that "not one Lithuanian official attended the ceremony as they identified the event as a Gazprom project."

"The Lithuanian Energy Ministry is fighting its own biggest energy company," he said.

Golubev said later that Gazprom might lower gas prices for Lithuania if fixed supply volumes are introduced.

He said one way of lowering prices for Lithuania might be to abandon seasonal imbalances in supplies in favor of a contract with fixed, constant volumes.

The agreement that the Lithuanian Energy Ministry unveiled at the end of March states that the government is entitled to annul the agreement without any consequences if Gazprom does not honor its gas supply commitments.

If the agreement is annulled, there will be full restitution on both sides – each of the parties will return to the other all that it received when the purchase-sale of share sin Lietuvos Dujos was closed.

The agreement says that any disputes will be settled first by negotiation or, if 60 days of negotiations fail, then in accordance with Stockholm arbitration tribunal regulations.

The Lithuanian government, which owns 17. 7percen of Lietuvos Dujos, started to object after Gazprom and Germany’s E.ON Ruhrgas, which owns 38.9 percen, opposed an initiative to unbundle the trunk gas pipelines, saying this was in breach of the privatization deal.

The government, in its drive to fulfill the EU’s Third Energy package in its most radical form, approved the basics of a new gas law that separates the gas transportation business and trunk pipelines back on May 27, 2010.

The Energy Ministry also asked a court to investigate Lietuvos Dujos and its governing bodies and, if it saw fit, to remove management board members Valery Golubev and Kirill Seleznev and the company’s general director, Viktoras Valentukevicius.

The ministry also asked the court to order Lietuvos Dujos to start negotiating a lower gas price with Gazprom.