president: Gazprom's prices for Lithuania 'political'

Gas prices set for Lithuania by Russian giant Gazprom are political and not based on economics, the Baltic state's president said Tuesday, blaming the Kremlin. "Gazprom's prices have a political character, not an economic one," Grybauskaite told reporters amid a war of words between Lithuania and Gazprom, its sole supplier. "The difference in price for Lithuania and on global markets has a purely political tone. That is why everything depends on politics and on the attitude of Russia's leaders towards cooperation with Lithuania," she added. The price set in Gazprom's supply deal with Lithuania is confidential, but Grybauskaite has estimated that her country pays 30-40 percent more than Germany, for example. In January Lithuania asked the European Commission -- the European Union executive which polices competition rules in the 27-nation bloc -- to probe Gazprom for abusing its market clout. Gazprom has denied Lithuania's claims. The small Baltic nation's ties with Moscow have been rocky since it won independence as the Soviet Union unravelled in 1991, after five decades of Kremlin rule. Lithuania's reliance on Russia for gas is a legacy of its time as a Soviet republic. In another hangover, Lithuania lacks power-supply links with Western Europe, even though it joined the European Union in 2004. Grybauskaite said cutting dependence on energy from Russia was a strategic goal. She underlined plans to hook Lithuania to the power grids of Sweden and neighbour Poland, as well as to build a gas pipeline to the latter and a liquefied natural gas terminal on the Baltic coast. Lithuania's dependence has been highlighted since the end of 2009 when it closed its only nuclear power plant, a Soviet-era facility. It is planning by 2020 to build a new plant with neighbours Poland, Latvia and Estonia, but meanwhile has had to turn to mothballed gas-fired power stations. Two weeks ago, Lithuania's parliament angered Gazprom by voting in an EU-piloted gas market reform which Russia's Prime Minister Vladimir Putin has dubbed "banditry". Due to be in force in 2013, it bars a country's suppliers from managing the gas-mains system to boost competition. It marks a direct challenge to Gazprom which is not only the sole supplier but also owns 37.1-percent stake in Lithuania's gas-mains company Lietuvos Dujos, bought in 2004. Gazprom and another major Lietuvos Dujos player E.ON Ruhrgas International from Germany which owns 38.9 percent pressed Vilnius to seek an exemption from Brussels' requirements. But the Lithuanian government which holds 17.7 percent refused. Energy Minister Arvydas Sekmokas said the reform would strengthen Vilnius' hand, vowing to negotiate a 15-percent price cut.