Limiting Dependence on Russian Gas
RIGA – The season for gas price negotiations has come upon us.
Lithuania fears a gas price hike from the Russian monopoly giant Gazprom. Latvia and Estonia awaiting their turn in Moscow. If you trust Russian sources, the price for gas will be raised to European level for those two countries as well.
If the Lukashenko’s Kingdom of Belarus is to serve as a pattern, the Russians can play tough.
Lithuanian Prime Minister already suggested to negotiate prices with Gazprom together with other EU countries, presumably Latvia and Estonia.
“We have a chance to involve other European Union countries since we are not the only ones with such prices hanging over. It would not be easy for Lithuania to negotiate alone in this case,” Gediminas Kirkilas said this morning.
Officially, Gazprom held off raising prices for three years because of the so-called transitional period when the three countries joined the European Union. But really, it was in exchange for gaining a share in three gas distribution companies in three countries. Gazprom received 37.1 per cent in Lietuvos dujos, 34 per cent in Latvijas gaze, and 37.02 per cent in Eesti Gaas.
But as the EU considers separating supply and distribution channels, it also considers limiting non-EU ownership in newly created companies. It will likely impact Russian presence in the energy market, especially in the Baltics.
Given the Baltics desire to limit their dependence on Russian sources of energy this would certainly be a welcome step. As much as Russia protects its strategic market from foreign investors, the EU ought to do the same. But for now, the Baltic States are wrangling with the construction of a new nuclear plant in Lithuania and interconnecting power grids between three Baltic states, Poland and Sweden to limit their dependence on Russian energy sources.
Update:Robert Amsterdam suggests the EU reciprocity clause – disallowing foreign investors to “purchase energy assets unless they are equally open to investors in their country” – is targeted specifically at Gazprom Hat tip: Peteris
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