Baltics face huge gas price hike

  • 2007-08-31
  • By Mike Collier

POWER PLAY: A big rise in gas prices from January will impact the Baltic economies (Photo: Gazprom)

MOSCOW 's Russian gas monopoly Gazprom is beginning price negotiations with the Baltic states that could lead to large rises in the bills paid by domestic and commercial consumers.

Early indications are that Gazprom will not have any qualms about demanding greatly increased bills. Lithuania was the first of the three to be informed about Gazprom's intention to increase prices by 40 percent. With the increased seasonal usage of winter looming, large price rises would not only hit consumers in tne pocket, but would add to the Baltics' already considerable inflationary pressure when the new charges come into force from January 1, 2008.

A 40 percent rise would take the price Lithuania pays for Russian natural gas from $190 (140 euros) per 1,000 cubic meters to $280 (205 euros).

Formal negotiations for both Latvia and Estonia will start soon, but both are almost certain to be hit just as hard as Lithuania and can expect to pay similar end prices.

Russian media sources quote a Gazprom manager saying that the Baltics will all be expected to pay "normal European prices" now that a three year transition period since the Baltics acceded to the EU has expired.

In return for the moratorium on pricing, Gazprom received large slices of the gas supply infrastructure in each country, gaining stakes of more than a third in Lietuvos Dujos, Latvijas Gaze and Eesti Gas.

Gazprom refused to make any official comment to The Baltic Times, in order not to pre-empt the discussions. Prices for Belarus and Ukraine will be set once Baltic tariffs have been set.