“... the word “unbundling” first of all means that Gazprom has actually been debarred from the management of Lietuvos Dujos and left with the right to sell gas,” a statement from the think-tank quoted the expert as saying.
“The fight in Lithuania is just the first fruit for Gazprom. Next it will be the gas pipelines in Estonia. Estonia’s government is making active arrangements for the reorganization of Eesti Gaas, in which Gazprom owns almost a half of shares together with the associated company Itera Latvia,” Korolchuk said.
Lithuania’s decision to ‘squeeze’ Russia’s gas monopolist and deprive it of natural gas transmission pipelines was more of a political and strategic measure taken amid preparations for the construction of a liquefied natural gas (LNG) terminal, which is expected to ensure alternative supply of gas from 2015, the expert said.
With the LNG terminal in place, Lithuania’s largest gas users would probably be obliged by legislation to acquire up to 25 percent of their gas imports from the terminal. According to BNS sources, it means that many of such companies, which are now bound by long-term contracts with Gazprom that will expire in 2013-2015, will no longer be able to sign long-term deals on the purchase of 100 percent of gas from Russia.
The institute also points out that Lithuania seeks to connect its gas pipelines with those of Poland and thus eliminate Russia’s gas monopoly completely by 2018.
According to Korolchuk, the loss of Lithuania’s market and the projects of an LNG terminal and a gas link with Poland go against Gazprom’s plans hence Vilnius resorted to the EU’s third energy package without delay. As a result, Russia’s gas monopolist had no other choice but to agree ‘to bid farewell’ to its key assets in Lithuania, i.e. the natural gas transmission pipelines.
However, Gazprom negotiated a possibility to participate in several electricity generation projects in Germany together with E.ON in exchange.
In Korolchuk’s view, Lithuania should be a model for Ukraine, which is pressed by Russia to choose an unfavorable option for the reorganization of gas pipeline system.
“Lithuania’s story proves that Ukraine’s position is right. Despite inflated prices of Russian gas, Ukraine does not agree to give its system of gas pipelines away under the terms that are unfavorable to it,” the expert said.
With Lietuvos Dujos reorganized by October 2014, natural gas transmission pipelines and other infrastructure necessary for transmission operations will be spun off into a separate company. Lietuvos Dujos will continue to operate as a gas supplier, while its distribution operations and distribution pipelines will be taken over by a newly established subsidiary.
On Monday, Lietuvos Dujos' shareholders, and later the company’s board, approved a plan on the unbundling of the company’s operations under which gas transmission operations will be spun off into a new company by 31 July 2013, and the distribution operations will be taken over by a newly established subsidiary by 31 October 2014.
On Thursday, the plan shall be submitted to the National Control Commission for Prices and Energy, which will monitor its implementation.
Unofficial sources say that in the future, the state is likely to take back control of the gas transmission grid, possibly jointly with a new investor. Energy Minister Arvydas Sekmokas has said repeatedly that the natural gas transmission pipelines should be owned by the state.
Lietuvos Dujos, the supplier, and its newly-established distribution subsidiary are likely to be owned by Gazprom jointly with E. ON.
Some analysts believe that Lithuania’s natural gas transmission pipelines might be worth up to 1 billion litas (EUR 289.85 m) depending on the valuation method.
The government has set an end-2014 deadline for the unbundling of Lietuvos Dujos' transmission, distribution and supply assets in line with the EU's third energy package.
Gazprom owns 37.06 percent of shares in Lietuvos Dujos, E.ON Ruhrgas International holds 38.9 percent, and the Energy Ministry holds 17.7 percent.
