Gazprom denies price allegations

Russian giant Gazprom on Wednesday hit back at claims by Lithuania's president that the gas prices it applied for the Baltic state are were political and not based on economics. "Lithuania's gas prices are not political," Gazprom spokesman Sergei Kupriyanov said in a statement released in the Lithuanian capital Vilnius. "They are the result of a gas pricing formula which was agreed between our Lithuanian partners -- including the Lithuanian government -- and Gazprom back in 2004," he said. On Tuesday, Lithuania's President Dalia Grybauskaite had fired a new shot in a verbal war between the nation of three million and Gazprom, its sole supplier, suggesting it was being treated unfairly. "Gazprom's prices have a political character, not an economic one," Grybauskaite said. "The difference in price for Lithuania and on global markets has a purely political tone," she added, blaming "the attitude of Russia's leaders towards cooperation with Lithuania." In January Lithuania asked Brussels to probe Gazprom for allegedly abusing its market clout in the 27-nation European Union. The price set in Gazprom's supply deal with Lithuania is confidential, but Grybauskaite has estimated that it pays 30-40 percent more than Germany, for example. But Kupriyanov rejected the charges. "The principle of this (gas-pricing) formula is by no means used only in Lithuania, but in all European countries," he said. "The gas price in Europe can vary between different buyer countries and may change at different times within a signed contract," he explained. "All of this is pure economics and has absolutely nothing to do with politics. Lithuania must be well aware of it," he added. Lithuania's reliance on Russia for gas is a legacy of five decades of Soviet rule, which ended in 1991. Lithuania joined the EU in 2004. On Wednesday, Grybauskaite announced she had signed a law "unbundling" Lithuania's gas market -- an EU-piloted reform, meant to be in place by 2013, that bars suppliers from also running the gas-mains system. The reform challenges Gazprom because it owns 37.1 percent of Lithuania's gas-mains company Lietuvos Dujos, bought in 2004. Gazprom and Germany's E.ON Ruhrgas International, which owns 38.9 percent, pressed Vilnius to seek an exemption from EU rules. But the Lithuanian government, which holds 17.7 percent, refused. "Our negotiating position is that price for consumers should be fair," Energy Minister Arvydas Sekmokas told reporters Wednesday. "We have to orient to the prices that are set for our neighbours."