VILNIUS - Lietuvos Dujos (Lithuanian Gas) announced on Oct. 5 that it has halted construction on an underground natural gas storage facility in Vaskai after German and Russian investors recently privatized the company involved in the project.
The project, estimated to cost as much as 552 million litas (160 million euros), is likely to be abandoned altogether in December, the daily Lietuvos Rytas reported.
According to Lietuvos Dujos' technical director Jonas Janulionis, experts from Russia's Gazprom and Germany's Ruhrgas concluded that the Vaskai project in a northern district of Pakruojis was not viable.
Sources close to the project claim that the stored gas reserve is not cost-effective due to the existence of a large storage facility owned by the same shareholders operating in Latvia.
Moreover, there is a proposal to build a gas metering station on the Latvian border that would enable the transfer of natural gas between both nations.
Still, the need for an underground storage facility was acutely felt at the beginning of the year when Russian gas giant Gazprom cut off transit deliveries to Lithuania and other countries through its Belarusian rout, forcing the Baltic state to import gas from Latvia's Incukalns storage facility. The disruption was caused by Belarus' failure to pay its gas bills, Russian officials said at the time.
In March, Gazprom expressed an eagerness to participate in both Lithuania's underground storage facility project alongside the construction of a new gas pipeline to the Kaliningrad exclave.
"We intend to implement the project in cooperation with German investors in Lietuvos Dujos. The storage facility is required for both Lithuania and Kaliningrad." Alexander Ryazanov, Gazprom deputy chairman, said at a Moscow news conference this past spring. "However, we will assess the benefits of the facility as soon as we join the ranks of the Lithuanian gas company's shareholders."
But after the Feb. 18 incident the supply of natural gas to Lithuanian consumers was curbed by one-third for nearly two days, and heating suppliers and other companies had their natural gas taps completely shut off.
At the time Ryazanov maintained that, under a contract dealing with the transit of natural gas via Belarus, any future disruptions would be prevented.
Lietuvos Dujos is now controlled by Germany's E.ON Ruhrgas International and Russia's Gazprom.
