Gazprom to Sell its Stake in Lithuanian Utilities Lietuvos Dujos and Amber Grid

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The Lithuanian government has reported that Russian gas company Gazprom—the largest natural gas extractor in the world—plans to sell its sta...

The Lithuanian government has reported that Russian gas company Gazprom—the largest natural gas extractor in the world—plans to sell its stake in Lithuanian utilities Lietuvos Dujos and Amber Grid for 417 million litas ($164 million).
Gazprom provides all of Lithuania’s natural gas along a pipeline from Russia and currently owns 37.1 percent of the two utility companies.

Lithuanian Prime Minister Algirdas Butkevicius said that the move will not impact gas prices, at least not through 2015, which is when the current contract for gas purchases is due to expire.  Future prices will “depend on further talks with Gazprom.”

Gazprom was founded in 1989 when the Soviet Ministry of Gas Industry became a corporation, securing a monopoly in the gas sector and retaining all of its assets.  The organization became a joint-stock company in 1993, when the government employed a voucher method for the public to purchase shares.  The Russian government remains majority shareholder with 50.01 percent of the company.

Lietuvos Dujos was established in 1961 and deals in the imports, distribution, transmission and sales of natural gas.  Its market share is 45 percent.  Amber Grid, founded in 2013, is the operator of Lithuania’s natural gas transmission system.  The company serves power plants, district-heating plants, industrial companies and gas supply companies. Amber Grid is also the Associated Partner of ENTSOG (the European Network of Transmission System Operators for Gas).

A liquefied natural gas floating storage and regasification unit terminal is currently under construction in Lithuania.  A floating storage and regasification unit (FSRU) has been built and will reach the new terminal by December.  Upon its completion, Lithuania will be the fifth country in the world to use FSRU technology for liquefied natural gas.  The FSRU is expected to reduce the dependence on Russian energy in Lithuania, Estonia and Latvia.

Gazprom's board recently met in Moscow to decide whether to agree to proposals from Lithuanian state-owned firms EPSO-G and Lietuvos Energija to buy the stakes. The sale is in compliance with European Union gas market rules on fair competition, which specify that energy suppliers cannot dominate ownership of the infrastructure.

Former Lithuanian energy minister Arvydas Sekmokas weighed in on the sale, saying, “This is good news. The sale means that Lithuania and Gazprom will start conducting their business on a commercial basis, and this will eventually improve relations between Lithuania and Russia.

 

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