Gazprom does double-take on gas prices

  • 2005-06-15
  • From wire reports
VILNIUS - Prime Minister Algirdas Brazauskas braced Lithuanians for higher gas prices, just a week after assuring the public that the government would fight to control prices. He pinned blame on the "inevitable" price-hike on EU membership.

"Of course, it would be a hard blow to the economy, but there is nothing to be done 's we are EU members," Brazauskas said June 8, commenting on reports that Russia's Gazprom intended to raise gas prices for the Baltic states to the level paid by West European countries.

The announcement came just days after the prime minister met with Gazprom CEO Aleksei Miller, who at the time suggested there was no need to raise prices. Brazauskas expressed surprise that Gazprom executives did not tell him about their plans during the meeting in Vilnius.

"We imagine 's and that was what they said 's that there should be no major changes. We will fight to keep these prices as low as possible. Our only weapon is our persistence, while one of our main levers is a long-term gas supply contract, which is in effect until 2015," he said.

"Once we joined the EU, this issue is starting to come up. Certainly, there will be negotiations because our agreement with Gazprom calls for setting new prices from 2006, but the price formula and the main principles remain the same," he said.

Gazprom's deputy chairman, Alexander Ryazanov, said last week that the company was working on a three-year program to raise the price of gas supplied to the Baltic countries to the European average. To get an idea what this means, Brazauskas explained that West European countries pay $140 per 1,000 cubic meters for Russian gas, while Poland pays $120 and Lithuania $85 's $90.

According to the Russian Internet news portal RBC, Latvia currently pays $92 's $94 for 1,000 cubic meters, Lithuania $85 and Estonia $90.

Gazprom sold 2.9 billion cubic meters of gas to Lithuania, 1.5 billion to Latvia and 900 million to Estonia last year.

Meanwhile, a report surfaced that Lithuania expects the EU to help finance Lithuania's gas storage project by using funds from the Ignalina International Decommissioning Support Fund.

The Lietuvos Rytas daily reported that the European Parliament has already included this project in a list of European priority projects, and Lithuanian energy officials recently opened a study to pinpoint a location for a storage facility in the western part of the country. However, the study had been suspended as a final decision on project funding had not been made, according to Vladas Gagilas, director of energy resources department of the Ministry of Economy.

Jonas Janulionis, technical director of Lietuvos Dujos (Lithuanian Gas), confirmed that the company had no intentions to build the storage facility, which according to preliminary calculations would cost 150 million euros.