May 4, 2017 / 12:15 PM / 2 years ago

Lithuania urges tougher stance on Gazprom's EU anti-trust deal

VILNIUS, May 4 (Reuters) - Lithuania’s government has urged the European Commission to apply tougher conditions in its antitrust settlement with Russian state gas exporter Gazprom or impose a fine.

A provisional agreement, announced last month, would see Gazprom avoid a fine of up to 10 percent of its global turnover imposed after the EU said it abused its dominant market position and overcharged clients in eight eastern European countries.

In return the Russian gas giant, which denies the accusations, has offered concessions on contract terms and pricing to settle one of the EU’s largest and longest-running antitrust cases.

Some big utilities in eastern Europe back the proposed settlement, increasing chances of a deal that is opposed by those countries striving to loosen the Kremlin’s grip on their energy sectors.

“If the European Commission does not take our proposed stronger obligations into account, we see no other way to proceed than for European Commission to issue Gazprom with a fine,” Lithuanian Energy Minister Zygimantas Vaiciunas said in an emailed statement.

Lithuania’s submission to the Commission, dated Thursday and seen by Reuters, proposes a mechanism for Gazprom to price its gas in eastern Europe in line with prices charged in liquid hubs in the West, while taking into account lower delivery costs.

It also proposes requiring Gazprom to remove any restrictions from changing gas delivery points.

The submission says obligations proposed by Gazprom to the European Commission were of limited use due to their limited scope and loopholes. It said some of the proposed obligations could be avoided if Gazprom refused to hold long-term supply deals, which is what it already does in the Baltics.

The Lithuanian submission also said the settlement with Gazprom “lacks any compensation for the damage already done to the central and eastern European gas markets by Gazprom’s abuse of its dominant (or monopolistic) supplier position in the past periods”.

Lithuania said Gazprom’s “excessive pricing” led to 1.5 billion euros in overcharging and “caused irreparable damage to national gas market” which shrunk fast as consumers switched to other fuels, the submission said.

Gazprom had no comment on the Lithuanian submission or the minister’s statement.

Gazprom’s monopoly in the Baltic states of Lithuania, Latvia and Estonia ended in late 2014, when Lithuania inaugurated a liquefied natural gas (LNG) terminal.

Gazprom cut its gas price to Lithuania by about 20 percent in 2014, but still saw its previously dominant market position eclipsed by LNG supplied by Norway’s Statoil. (Reporting By Andrius Sytas; Editing by Niklas Pollard and Edmund Blair)

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