Lithuania will not surrender to pressure from Gazprom, the sole bidder for a one-third stake in the gas utility Lietuvos Dujos, and could delay the sell-off if the Russian gas giant proves too stingy with its offers, said Economy Minister Petras Cesna last week.
Gazprom and its Lithuanian partner, gas importer Dujotekana, on July 16 submitted the only application to buy the stake in Lietuvos Dujos.
Lietuvos Rytas reported that Gazprom wants to pay 70 percent of the 116 million litas ($33.78 million) that the German consortium of Ruhrgas and E.ON Energie paid for a 34 percent stake in the company in May.
The German consortium placed another 34 million litas in an escrow account and pledged to invest 70 million litas in a new issue of Lietuvos Dujos shares.
"Nobody is holding a gun to Lithuania's head and nobody is forcing us to sign a deal with Gazprom," Cesna said during a news conference. "We can continue to buy gas as we are buying it now."
Cesna mentioned that Gazprom is welcome to supplement its offer by agreeing to build a giant pipeline via Lithuania that would export Russian gas to the West. It would guarantee a steady annual income to the state budget.
Another possibility could be selling Russian gas to Lietuvos Dujos at discount.
"Anyway I'd think the price for the stake in Lietuvos Dujos should be close to what the Germans paid. If Gazprom now offers a very low price, what forces us to sell? Maybe over time the price will increase," Cesna said.
However, he noted that Gazprom's stake in Lietuvos Dujos could help ensure stable gas supplies and prices.
The Baltic states do not yet have a link to the Western European gas grid.
Lithuania has discussed plans to build a pipeline from Norway with Norwegian and Polish officials, but the plans are far from implementation.
At the moment, Gazprom supplies almost 100 percent of gas to Eastern Europe.
Earlier, Gazprom demanded a bigger stake in Lietuvos Dujos but backed down when it became clear that Lithuanian laws that allow only firms based in the European Union or NATO member countries to act as strategic investors during privatization of strategic firms such as Lietuvos Dujos, oil concern Mazeikiu Nafta and the Ignalina nuclear power plant.
Lithuanian privatization authorities have asked Gazprom to clarify certain aspects of its application before it could be approved as a bid in the company's tender."The main thing is to clarify the composition of the consortium, and there are other technical details, but I would not accent those," Nerijus Eiduke-vicius, vice minister of economy and tender commission head, told Reuters.
Rimandas Stonys, president of Dujotekana, has said his company is aiming to acquire 9 percent of Lietuvos Dujos while its Russian partner would buy 25 percent as required by tender conditions.
Dujotekana imports 60 percent of all Russian gas supplied to Lithuania.
Small private shareholders hold 8 percent of shares in Lietuvos Dujos.
After selling the second stake, the Lithuanian state will retain a 24 percent stake that could be sold in coming years.
Analysts predict that in the future, the government will be able to sell its stake for more than it can hope to gain by sales to German and Russian firms now.
Cesna said he expected Lietuvos Dujos to post a profit of about 40 million litas for the first half of 2002, up from 25.8 million for the same period of 2001.
He said much of the increase was attributable to the weakening of the U.S. dollar, as Lietuvos Dujos has dollar-denominated debt and also settles its deals in dollars for gas supplies from Russia.
Lietuvos Dujos had an audited net profit for full-year 2001 of 13 million litas after losing 100,000 litas in 2000.
Eidukevicius said the price for the gas company could have been higher had Gas de France not withdrawn from the competition.
That departure left the government with little room to maneuver with just Gazprom and the German consortium.
If the Gazprom deal goes through, Lithuania's gas industry will resemble closely those in Estonia and Slovakia, where Ruhrgas and Gazprom have a roughly equal stake in the company.
In Latvia, Gazprom and local partner Itera have more hold than Ruhrgas.
Gazprom is the world's largest gas exporter and with the help of Ruhrgas, supplies some 20 percent of all gas used in Western Europe.
Ruhrgas has 5 percent of shares in Gazprom while Gazprom has the same amount of shares in Ruhrgas.