Tuesday

3rd May 2016

Lithuania trying to throw off Soviet-era energy shackles

An aide to the Lithuanian President has said Russia is intent on keeping the Baltic countries inside its energy supply grip.

"For them [Russia], it is a vital interest. In Russia's military strategy, Russia defines decreasing energy dependency as a national security threat," Mindaugas Zickus told reporters in Vilnius on Tuesday (10 July).

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  • A field of tall grass next to the Soviet-era Ignalina power plant is the proposed site for Lithuania's new Visaginas nuclear station (Photo: EUobserver)

"They [Russia] were the only ones up to now to have the power to [set the energy] price and they want to do everything to retain that power [and] to dictate price. It is in their national interest to keep us in their electricity grid, to prevent the Baltic states, not only Lithuania, from building any alternative energy supply lines," he explained.

"A monopolistic supply can dictate price," Arvydas Sekmokas, Lithuania's minister of energy, added.

Lithuania is currently trying to cut its near total energy dependency on Russia and to break away from its Soviet-era energy infrastructure.

The new Visaginas Nuclear Power Plant, electricity grid links to Poland and Sweden and a liquefied natural gas (LNG) terminal are all part of the strategy.

The proposed site for Visaginas, next to Lithuania's Soviet-era Ignalina (INPP) atomic station, was given the go-ahead by a 2009 International Atomic Energy Agency assessment and a 2007 Lithuanian feasibility study.

INPP, which is being dismantled, has voiced concerns it will be unable to guarantee the safety of spent fuel to be stored on-site without additional funding from the European Commission.

But Dominykas Tuckus, the head of the Visaginas economics division, told reporters there are no better options. "An alternative site was proposed but it was also near Ignalina," he said.

He noted that construction of Visaginas would start in 2015, with 2020-2022 set as its operational starting date.

For the time being, Russia's Gazprom supplies 100 percent of its gas. Lithuania also imports 60 percent of its electricity from its former Soviet master, more than any other EU member state.

The small Baltic nation sold off its majority share in Lietuvos Dujos, its national gas operator, to Gazprom some 10 years ago, a decision it now regrets.

In the second quarter of 2012, Lithuanians paid around $510 per 1,000 cubic metre of gas, with the price increasing to $525 during winter months. Germany, by comparison, pays around $100 dollars less despite having a longer transmission pipeline.

The Lithuanians say Gazprom inflated gas prices because of their insistence on "ownership unbundling" - forcing Gazprom to separate its generation and distribution assets in line with EU law, an issue they hope to resolve before the end of 2014.

The EU's third energy package, meant to create a single EU gas and electricity market provides the legal framework for Lithuania to break apart the monopoly.

The Russians already shut down the Druzhba oil pipeline in Lithuania in 2006 in what Lithuania sees as revenge for its decision to sell an oil refinery to Poland rather than Russia.

The Russians said the closure was due to technical reasons.

"We offered to repair the pipeline using our [own] resources," said Darius Semaska, chief advisor to Lithuania's president.

But Russia refused the offer and the pipeline remains shut today, forcing Lithuania to get its oil from an import/export terminal at its port in Klaipeda at higher prices.

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