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2012 11 29

Lithuanian gas association complains to Brussels over LNG terminal

The Lithuanian Gas Association has filed a complaint with the European Commission against Lithuania over the country's liquefied natural gas (LNG) terminal law, which, according to the association, violates the EU's state aid rules and distorts competition.
Suskystintų gamtinių dujų terminalas – brangus ginklas prieš „Gazprom“ monopoliją.
. / „Klaipėdos naftos“ nuotr.
Temos: 1 Achema, AB

The country's biggest gas importers oppose the so-called "25 percent" rule imposed by law and say that the fertilizer manufacturer Achema, which has already complained against Lithuania to the European Commission, and other major gas consumers will have to cover part of the LNG terminal construction costs via the transmission tariff.

The association filed its complaint on Thursday. It says that the law restricts the freedoms of natural gas consumers and suppliers in an unjustified and disproportionate manner.

"An analysis shows that the LNG law and legislation implementing the law is against European Union law, including, but not limited to, the provisions of the Treaty on the Functioning of the European Union regarding state aid and the functioning of the internal market, (as well as) the gas legislation forming part of the Third Energy Package, which allow all consumers to freely choose their suppliers and all suppliers freely to deliver to their customers," it said in a press release on Thursday.

The association calls for scrapping the legally imposed requirement for large gas companies to buy at least 25 percent of gas from the terminal, which it says creates exceptional market conditions for the terminal's operator and restricts competition.

The LNG terminal will meet only part of Lithuania's gas needs. However, if the law is not amended, all Lithuanian consumers will have to cover the terminal's costs, it said.

The LNG law was passed in early summer.

When asked by BNS why they decided to turn to Brussels now, Nijolė Jovaišienė, the association's director, said that it had taken time to prepare the complaint according to the European Commission's requirements.

The association's members include Lietuvos Dujos (Lithuanian Gas), which is controlled by Russia's Gazprom and Germany's E.ON Ruhrgas, as well as Dujotekana, which is indirectly controlled by Gazprom, and Haupas which is owned by private individuals, and SG Dujos.

The 25 percent rule has been fiercely opposed by Achema, which has already signed a long-term gas supply contract with Gazprom, Lietuvos Dujos, whose contract with Gazprom expires in late 2015, and the country's largest heat suppliers.

Achema complained to Brussels over the 25 percent rule in September. The EU's executive body is looking into whether or not to open a probe.

Prime Minister-designate Algirdas Butkevičius said some time ago that his government might scrap the 25 percent rule. He also said that they might revise the LNG terminal's financing model. Based on the current model, gas consumers are to pay 114.1 million litas (EUR 33m) to the terminal next year and around 200 million litas in 2013 to 2014.

Achema, the largest gas consumer, says that it will pay an additional 20 million litas due to an extra tariff component related to the LNG terminal.

Under the law on the LNG terminal, the 25 percent rule will apply not only to gas purchases from the terminal, but also to gas purchases from Gazprom, which is now the country's sole gas supplier.

The terminal is planned to be launched in late 2014, with about a billion cubic meters of gas expected to be pumped via the facility in the first year of operation. It is planned that the LNG terminal in Klaipėda will have an annual capacity of 2 billion to 3 billion cubic meters.

Lithuania consumes about 3 billion cubic meters of gas annually.

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