VILNIUS — The Lithuanian government received a letter Thursday from Russian oil and gas giant Gazprom demanding €140 million in compensation for what they say are losses from a Kaunas power and heat facility.

Gazprom, the state-owned energy company, bought the Kaunas Heat and Power Plant from the Lithuanian government in 2003 for 116.5 million litai (€33.7 million) with the condition of making a set margin on energy prices until 2018. Since then laws affecting the costing out of heat have allowed [private_supervisor]the price to change and on these grounds, Gazprom is demanding compensation for its losses.

The price of heating is now set at 14.76 cents per kilowatt hour, but Gazprom insists that by the formula set out in their contract, the cost should be 22.57 cents per kilowatt hour. The current heating price, which will stay the same until 2012, was set by the Lithuanian State Prices and Energy Control Commission on Oct. 31, 2008.

Unsure how to react

Prime Minister Andrius Kubilius’ office confirmed that they had also received the letter.

“The prime minister is not commenting because we need to get legal advice, but we can confirm that we got it,” political adviser to Kubilius, Virginijus Valentinavičius, told Baltic Reports.

The Ministry of Energy confirmed to Baltic Reports that the letter had been received that they would be checking its legality before making a “short reply.”

While the energy minister’s spokesman Kęstutis Jauniškis did not divulge the contents of the reply, he said it would take a few weeks of consideration and that it was being considered in “higher circles.”

“We got the letter and we are preparing the answer for Gazprom; it will be a very short answer. Our minister [Sekmokas] will prepare the answer to Gazprom,” Jauniškis said. “They argue that they bought the station in Kaunas and they would like the authorities to hold to their commitments with the prices of the heat. So, Gazprom is not happy.”

If the Russian company’s demands are not met, they have threatened to take the issue to international arbitration.

It’s Gazprom’s market

Through Gazprom the Russian government retains a virtual monopoly on the Lithuanian natural gas market, with Lithuania importing more than 80 percent of its natural gas from Russia.

The Lithuanian government is considering building a floating liquid natural gas terminal that should be built within the next few years, though concrete estimates for its construction are not yet available. The platform would allow Lithuania to receive gas by ship, which would facilitate a diversification of importers.

At the start of 2010, Lithuania’s nuclear power plant in Ignalina was shut down meaning that the gas powered plants in the country are now picking up the slack. The nuclear power plant once supplied the country with 70 percent of its energy needs. [/private_supervisor] [private_subscription 1 month]the price to change and on these grounds, Gazprom is demanding compensation for its losses.

The price of heating is now set at 14.76 cents per kilowatt hour, but Gazprom insists that by the formula set out in their contract, the cost should be 22.57 cents per kilowatt hour. The current heating price, which will stay the same until 2012, was set by the Lithuanian State Prices and Energy Control Commission on Oct. 31, 2008.

Unsure how to react

Prime Minister Andrius Kubilius’ office confirmed that they had also received the letter.

“The prime minister is not commenting because we need to get legal advice, but we can confirm that we got it,” political adviser to Kubilius, Virginijus Valentinavičius, told Baltic Reports.

The Ministry of Energy confirmed to Baltic Reports that the letter had been received that they would be checking its legality before making a “short reply.”

While the energy minister’s spokesman Kęstutis Jauniškis did not divulge the contents of the reply, he said it would take a few weeks of consideration and that it was being considered in “higher circles.”

“We got the letter and we are preparing the answer for Gazprom; it will be a very short answer. Our minister [Sekmokas] will prepare the answer to Gazprom,” Jauniškis said. “They argue that they bought the station in Kaunas and they would like the authorities to hold to their commitments with the prices of the heat. So, Gazprom is not happy.”

If the Russian company’s demands are not met, they have threatened to take the issue to international arbitration.

It’s Gazprom’s market

Through Gazprom the Russian government retains a virtual monopoly on the Lithuanian natural gas market, with Lithuania importing more than 80 percent of its natural gas from Russia.

The Lithuanian government is considering building a floating liquid natural gas terminal that should be built within the next few years, though concrete estimates for its construction are not yet available. The platform would allow Lithuania to receive gas by ship, which would facilitate a diversification of importers.

At the start of 2010, Lithuania’s nuclear power plant in Ignalina was shut down meaning that the gas powered plants in the country are now picking up the slack. The nuclear power plant once supplied the country with 70 percent of its energy needs. [/private_subscription 1 month] [private_subscription 4 months]the price to change and on these grounds, Gazprom is demanding compensation for its losses.

The price of heating is now set at 14.76 cents per kilowatt hour, but Gazprom insists that by the formula set out in their contract, the cost should be 22.57 cents per kilowatt hour. The current heating price, which will stay the same until 2012, was set by the Lithuanian State Prices and Energy Control Commission on Oct. 31, 2008.

Unsure how to react

Prime Minister Andrius Kubilius’ office confirmed that they had also received the letter.

“The prime minister is not commenting because we need to get legal advice, but we can confirm that we got it,” political adviser to Kubilius, Virginijus Valentinavičius, told Baltic Reports.

The Ministry of Energy confirmed to Baltic Reports that the letter had been received that they would be checking its legality before making a “short reply.”

While the energy minister’s spokesman Kęstutis Jauniškis did not divulge the contents of the reply, he said it would take a few weeks of consideration and that it was being considered in “higher circles.”

“We got the letter and we are preparing the answer for Gazprom; it will be a very short answer. Our minister [Sekmokas] will prepare the answer to Gazprom,” Jauniškis said. “They argue that they bought the station in Kaunas and they would like the authorities to hold to their commitments with the prices of the heat. So, Gazprom is not happy.”

If the Russian company’s demands are not met, they have threatened to take the issue to international arbitration.

It’s Gazprom’s market

Through Gazprom the Russian government retains a virtual monopoly on the Lithuanian natural gas market, with Lithuania importing more than 80 percent of its natural gas from Russia.

The Lithuanian government is considering building a floating liquid natural gas terminal that should be built within the next few years, though concrete estimates for its construction are not yet available. The platform would allow Lithuania to receive gas by ship, which would facilitate a diversification of importers.

At the start of 2010, Lithuania’s nuclear power plant in Ignalina was shut down meaning that the gas powered plants in the country are now picking up the slack. The nuclear power plant once supplied the country with 70 percent of its energy needs. [/private_subscription 4 months] [private_subscription 1 year]the price to change and on these grounds, Gazprom is demanding compensation for its losses.

The price of heating is now set at 14.76 cents per kilowatt hour, but Gazprom insists that by the formula set out in their contract, the cost should be 22.57 cents per kilowatt hour. The current heating price, which will stay the same until 2012, was set by the Lithuanian State Prices and Energy Control Commission on Oct. 31, 2008.

Unsure how to react

Prime Minister Andrius Kubilius’ office confirmed that they had also received the letter.

“The prime minister is not commenting because we need to get legal advice, but we can confirm that we got it,” political adviser to Kubilius, Virginijus Valentinavičius, told Baltic Reports.

The Ministry of Energy confirmed to Baltic Reports that the letter had been received that they would be checking its legality before making a “short reply.”

While the energy minister’s spokesman Kęstutis Jauniškis did not divulge the contents of the reply, he said it would take a few weeks of consideration and that it was being considered in “higher circles.”

“We got the letter and we are preparing the answer for Gazprom; it will be a very short answer. Our minister [Sekmokas] will prepare the answer to Gazprom,” Jauniškis said. “They argue that they bought the station in Kaunas and they would like the authorities to hold to their commitments with the prices of the heat. So, Gazprom is not happy.”

If the Russian company’s demands are not met, they have threatened to take the issue to international arbitration.

It’s Gazprom’s market

Through Gazprom the Russian government retains a virtual monopoly on the Lithuanian natural gas market, with Lithuania importing more than 80 percent of its natural gas from Russia.

The Lithuanian government is considering building a floating liquid natural gas terminal that should be built within the next few years, though concrete estimates for its construction are not yet available. The platform would allow Lithuania to receive gas by ship, which would facilitate a diversification of importers.

At the start of 2010, Lithuania’s nuclear power plant in Ignalina was shut down meaning that the gas powered plants in the country are now picking up the slack. The nuclear power plant once supplied the country with 70 percent of its energy needs. [/private_subscription 1 year]

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