23rd Oct 2016

Lithuania suing Russian energy giant Gazprom

  • Lithuania filed €1.4 billion lawsuit against Gazprom (Photo: Joffley)

Lithuania has highlighted that Russian energy giant Gazprom is facing a series of billion-euro lawsuits on alleged price-fixing, as well as the recently-opened European Commission probe.

Vilnius is prosecuting a €1.4 billion legal action against it at the Stockholm Arbitration Tribunal for alleged distortion of gas prices in Lithuania between 2004 and 2012.

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Lithuania's Prime Minister Andrius Kubilius on Wednesday (3 October) said in a statement that German and Polish companies have also filed Gazprom cases.

"In this respect Lithuania is following suit," said Kubilius.

Lithuania is entirely dependent on Gazprom for its gas supplies and imports more than 80 percent of its energy from Russia.

The small Baltic nation sold off its majority share in AB Lietuvos dujos, its national gas operator, to Gazprom some 10 years ago.

Lithuania's energy minister Arvydas Sekmokas pointed out that prices went from $84 dollars in 2004 to $497 in 2012 per 1,000 cubic metres of gas, reports the AFP.

Lithuania claims Gazprom assigned board members to AB Lietuvos dujos who then agreed to inflate energy prices.

"These board members could have acted in the interest of Gazprom rather than AB Lietuvos dujos, when casting their vote regarding amendments to the gas supply agreement," said Kubilius’ office in a statement.

The decision to file the lawsuit was influenced by the 4 September launch of a European Commission probe into allegations of price fixing by the energy giant in Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia.

"The fact that the European Commission started an official inquiry into the Gazprom’s suspected unfair price policy in central and eastern Europe is of crucial importance," Kubilius noted.

The commission claims Gazprom may have divided gas markets by obstructing the free flow of gas across member states, deliberately obstructed the diversification of gas supply and imposed unfair prices.

Gazprom initially dismissed the investigation as an EU attempt to extort money for poor member states. Russian President Vladimir Putin later passed a law to block the company from co-operating with EU anti-trust officials.

Meanwhile, the closure of Lithuania’s Ignalina power plant may have aggravated its energy dependency.

Vilnius claims the plant produced more than 70 percent of its electricity but was required to shut down production as a pre-condition for joining the EU in 2004. Plans for a new power plant are underway.

Lithuania is also unable to import electricity from other EU countries because of its Soviet-era network but is currently working on a number of projects to expand its energy systems with Sweden, Poland and regional Baltic states.

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