October 28, 2011 / 8:06 AM / 8 years ago

UPDATE 1-Lithuania sets gas unbundling deadline for Oct 2014

* Lithuania sets gas unbundling deadline for end-Oct 2014

* Govt says reached agreement with Germany’s E.ON on gas utility

* Russia’s Gazprom, sole gas supplier, did not take part in talks (Adds quotes, background)

VILNIUS, Oct 28 (Reuters) - The Lithuanian government said on Friday it had set an end-October 2014 deadline for unbundling the gas sector after talks with Germany’s E.ON Ruhrghas, while Russia’s Gazprom did not take part in talks.

“E.ON has agreed to start talks with the government on the voluntarily reorganisation of gas utility Lietuvos Dujos , but conditions remain to be negotiated,” Kestutis Skiudas, Prime Minister Andrius Kubilius’ adviser on energy, told Reuters.

Germany’s E.ON Ruhrgas holds a 38.9 percent stake in Lietuvos Dujos, while the government has 17.7 percent.

“After talks with E.ON the government set today an Oct. 31, 2014 deadline for the gas sector’s unbundling,” Skiudas added. “Gazprom was informed, but it did not attend the talks.”

The EU agreed in March 2009 to liberalise energy markets by splitting big utility groups, ensuring small gas suppliers can get unhindered access to European infrastructure and compete on an equal footing with dominant players.

Russian Prime Minister Vladimir Putin has criticised EU laws saying they hinder investment and amount to robbery.

EU regulations provide a few options for liberalising gas markets, with Lithuania choosing the most drastic one - full separation of ownership of gas supply and transportation assets.

Gazprom , which holds 37.1 percent of Lietuvos Dujos, would have to give up its ownership of the country’s pipelines under a law approved by the parliament earlier this year.

The centre-right government of Prime Minister Kubilius aims at regain control of major gas pipelines, also used for gas transit to Russia’s Kaliningrad enclave, which were privatised by the former centre-left government in 2002-2004.

“There are two options to reorganise Lietuvos Dujos - either via voluntarily reorganisation or imposing the law the hard way,” Skiudas said, declining to elaborate. (Reporting by Nerijus Adomaitis; editing by Jason Neely)

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