Lithuanian Parliament Votes to Unbundle Gas Sector

Lithuania’s parliament on Thursday (6/30/2011) approved a bill to separate the country’s gas transportation and supply assets, potentially igniting a row with Russian energy group Gazprom .

If the president signs the bill, Gazprom, which holds 37.1 percent of the Baltic state’s gas utility Lietuvos Dujos, would have to give up its ownership of the country’s pipelines. Gazprom is Lithuania’s sole gas supplier.

Parliament recorded 81 votes in favour, 23 against and seven abstentions.

“It’s an important step towards energy independence … It was a big mistake to sell the transportation pipelines eight years ago,” Lithuania Prime Minister Andrius Kubilius told lawmakers after the vote.

The former Social Democrat government privatised the gas utility in two stages in 2002 through 2004, with E.ON Ruhrgas and Gazprom taking more than a third each.
The Social Democrats, who voted against the unbundling bill, warned it may cost Lithuania up to 1.5 billion litas ($616 million) to reacquire the pipelines.

The EU agreed in March 2009 to liberalise energy markets by splitting big utility groups, ensuring small gas suppliers can get unhindered access to European infrastructure and compete on an equal footing with the dominant players.

Russian Prime Minister Vladimir Putin has criticised EU laws saying they hinder investment and amount to robbery.

Putin cited Lithuania, where Gazprom and Germany’s E.ON have warned of supply disruptions should unbundling go ahead.

Russia remains Lithuania’s sole natural gas supply source but the Baltic state wants to build a liquefied natural gas terminal to diversify supply. (Reporting by Nerijus Adomaitis; Editing by David Holmes)