Lithuania sues Russia's Gazprom over pricing

Lithuania said Wednesday that it had filed an international lawsuit against its sole gas supplier Gazprom, seeking over a billion euros in damages due to what Vilnius sees as the Russian giant abusing its market clout. "Lithuania initiated an arbitration procedure at the Stockholm arbitration tribunal against Gazprom over the gas price for Lithuania," Energy Minister Arvydas Sekmokas told journalists. He said the Russian energy behemoth had failed to respect its commitment to apply a fair gas price for the Baltic state, which has faced an increase from $84 dollars in 2004 to $497 in 2012 per 1,000 cubic metres of gas. "We're claiming damages for consumers, which we count as up to five billion litas," (1.44 billion euros, $1.87 billion), Sekmokas said. He said the process could last 18 months to two years, but that it may not need to come to a ruling. "We've seen examples with other countries where there were agreements, where the plaintiff withdrew the suit after agreement over more favourable gas prices," he explained. Prime Minister Andrius Kubilius noted Lithuania was taking a route trodden by Germany, where energy group EON secured a price-cut deal after filing a lawsuit. He said Germany's RWE and Polish group PGNiG had also taken legal action. "Lithuania is following the same path," Kubilius said. "We tried to persuade Gazprom to adjust prices and not wait for such an arbitration suit, but we saw that wasn't going to happen,"  he added. The lawsuit, part of a long-running dispute between the two sides, comes after the European Union last month launched a probe of Gazprom's alleged abuse of its muscle in eight member states that were in Moscow's Cold War stomping ground. Apart from Lithuania, the affected countries are Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Poland and Slovakia. The EU probe centres on Gazprom's use of long-term contracts to lock in prices that are tied to that of oil -- a policy that often leaves its supplies far more expensive than those available on the open market. West European nations, which have a broader range of gas suppliers, are charged less by Gazprom, Brussels has noted. Moscow has reacted angrily, claiming the EU wants to force Gazprom to sell east European economies cheap energy. The European Commission -- the executive body and competition policeman of the 27-nation EU, with the power to impose hefty fines on corporate wrongdoers -- has insisted it simply wants Gazprom to play by free-market rules. Gazprom is the only natural gas supplier of Lithuania, which broke free from the Soviet Union in 1990 and joined the EU and NATO in 2004. The two sides have also locked horns over Lithuania's moves to implement an EU gas market reform which Gazprom claims harms its business interests. The reform, which bars suppliers from also running a country's gas distribution system, is a direct challenge to Gazprom which owns 37.1-percent of Lithuanian gas distributor Lietuvos Dujos.