UPDATE 1-Russia's Gazprom agrees to adopt EU market rules in Lithuania -PM

Fri Feb 7, 2014 11:17am EST

Related Topics

* Lithuania's PM meets Gazprom's CEO in Russia's Sochi

* Gazprom has to sell stakes in gas grid company

* Long-term Russia gas supply contract expires in 2015 (Adds government comment, background, changes dateline)

VILNIUS, Feb 7 (Reuters) - Russian pipeline gas export monopoly Gazprom has told Lithuania it will implement European Union market rules that would require it to sell off gas transmission assets there, the Baltic state's prime minister said on Friday.

The EU's Third Energy Package of legislation, strongly criticised by Moscow in the past, aims to prevent those that dominate supply, such as Gazprom, from also dominating distribution networks.

"Gazprom agrees not to question (implementation) of the EU's Third Energy Package. We have agreed on this," the government press office quoted Prime Minister Algirdas Butkevicius as saying after meeting Gazprom's CEO Alexei Miller in the Russian resort of Sochi.

Ex-Soviet Lithuania, which is entirely reliant on Russia for natural gas and pays some of the highest prices in Europe, has been negotiating a new deal with Gazprom.

The question of how to apply EU gas market liberalisation rules in Lithuania has been an obstacle in the process.

"I hope that the meeting with Miller will help to speed up the talks (on other issues)," Butkevicius added after the discussion in the Russian resort of Sochi.

Gazprom was not immediately available to comment.

Butkevicius, visiting Sochi for the opening of the Winter Olympics, also had an informal meeting with Russian Prime Minister Dmitry Medvedev, the press office said.

Lithuania's government has previously said it would seek to buy the stakes held by Gazprom and Germany's E.ON in national gas distributor Amber Grid, aiming to regain control of the grid privatised 10 years ago.

Amber Grid was spun off from Lithuanian gas utility Lietuvos Dujos last August, and both companies are 38.9 percent owned by E.ON and 37.1 percent by Gazprom.

The Lithuanian state currently has 17.7 percent in each.

E.ON backed the government in a vote at a Lietuvos Dujos shareholders meeting on Jan. 30 to seek arbitration in a dispute with Gazprom over gas prices.

Lietuvos Dujos had said it had so far failed to secure lower prices through negotiations.

A long-term gas supply contract between Lietuvos Dujos , which supplies gas to households, and Gazprom expires in 2015.

Lithuania, which like other countries in eastern Europe is keen to diversify its energy sources to decrease reliance on Moscow, plans to start importing liquefied natural gas (LNG) the same year.

Meanwhile, the EU competition chief said on Friday Gazprom has not yet satisfied European Commission concerns over pricing and the EU executive body may charge the state-controlled Russian company with antitrust abuses.

The world's top gas producer and the supplier of a quarter of Europe's gas needs, has been under EU investigation since September 2012 for suspected anti-competitive behaviour, including overcharging customers and blocking rival suppliers.

Gazprom said last month it wanted to settle the 17-month EU antitrust investigation but would resist regulatory pressure to change its pricing practices in eastern Europe.

Gazprom says its long-term contracts are fair, offer security and can be cheaper than buying on immediate-term, or spot, markets, which spike during supply shocks. (Reporting by Andrius Sytas; Writing by Nerijus Adomaitis; Editing by Anthony Barker)

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