Lithuania's Russian-backed utility complains to EU over gas law

Fri Dec 7, 2012 7:36am EST

Related Topics

* Complaint alleges the LNG law violates EU laws

* Says it restricts and distorts competition

* Lithuania seeks to wean itself off Russian energy

VILNIUS, Dec 7 (Reuters) - Lithuania's partly Russian-owned gas utility has complained to Brussels over a law, aimed at cutting the country's reliance on pipeline gas from Russia, that would make the company buy some supply from a liquefied natural gas terminal.

Lietuvos Dujos, one-third owned by Russian pipeline gas export monopoly Gazprom, said it had told the European Commission the LNG terminal legislation violates EU law and will "severely restrict and distort competition."

"Therefore, on 6 December 2012, AB Lietuvos Dujos submitted a complaint to the European Commission requesting to initiate infringement proceedings," the company said in a statement on Friday.

Ex-Soviet Lithuania remains heavily reliant on Russian gas long after it regained independence in 1991. The Baltic state plans an LNG terminal so it can import gas brought by sea from other suppliers and aims to have it online by December 2014.

The outgoing centre-right government backed a requirement that gas distributors have to buy at least 25 percent of their gas from the terminal to prevent Gazprom from undercutting it by dumping pipeline gas cheap.

Lietuvos Dujos, in which Gazprom holds a 37.1 percent stake, wants the government to scrap this requirement.

It also said that the law, adopted in June, restricts use of the terminal by companies in other EU member states.

German company E.ON has 38.9 percent of Lietuvos Dujos and the state has 17.7 percent.

The new centre-left government, elected in October, has said it plans to review the LNG law, but its position in disputes with Russia over gas is not yet clear.

The relationship between Moscow and the European Union over energy has long been strained and in September the European Commission opened an investigation into suspected anti-competitive market practices by Gazprom.

The probe is focused on suspicions Gazprom was hindering the free flow of gas across the EU's 27 countries, preventing supply diversification and imposing unfair prices on its customers by linking the price of gas to oil prices. (Reporting by Aleks Tapinsh; Editing by Anthony Barker)

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