Lithuanian Government: LNG terminal will force Gazprom to lower natural gas prices

“We have to create the conditions for the terminal to be able to function and to create an actual possibility for the top gas users to choose between the supply of gas from Gazprom and the liquefied gas market through certain economic mechanisms since we actually have to set the conditions for market creation and the economic conditions for the terminal’s operations keeping in mind that the operations of the LNG terminal will be accompanied by Gazprom’s efforts to compete with it through the lowering of its gas prices,” Kubilius told the reporters on Monday.

The government discussed a bill that would govern the operations of the terminal on Monday.

Energy Minister Arvydas Sekmokas said on Monday that an obligation for the companies holding a gas supplier’s license to buy 25 percent of their gas imports from the LNG terminal and another 25 percent from Gazprom, which is now Lithuania’s sole supplier of natural gas, would encourage competition. The 25-percent rule would be applied both to gas purchased from the terminal and to gas acquired from Gazprom.

“25 percent are designed to speed up the creation of the market. Gazprom now demands during negotiations that the suppliers should oblige to buy 100 percent of natural gas from Gazprom. This would prevent competition, the market. 25 percent would pave the way for competition, for the supply of gas from another source,” Sekmokas said.

“These requirements are adequate for both parties. We say that there should be two different products on the market – gas supplied under long-term contracts and also gas supplied under short-term contracts,” the minister said.