Russia: Further impacts on the energy market

Deals with Lithuania

Talks are currently in place between Lithuania and Russian company Gazprom with regards to the reduction of wholesale gas prices. Over the last 18 months, Gazprom has provided almost all of its European purchasers with a discount, however an agreement with regards to revised contracts and prices has yet to be met with Lithuania which is the Baltic’s dominant consumer of Russian gas.

Gazprom’s Chief Executive Alexei Miller has said that the current negotiations with Lithuania include ‘significant reduction(s) of prices’ however, she also commented that ‘no hard decisions have been made.’

Dalia Grybauskaite, Lithuanian President has said of the situation in an interview with a national radio station, ‘I think Gazprom should have reduced the prices for us a long time ago, and the government went in to international arbitration seeking LTL 5 billion not for nothing. Gazprom knows full well it is losing the case against Lithuania, having lost a pair of such cases in Europe, so it has rushed to propose allegedly lower prices.’

LNG monopoly

At the moment, Gazprom has a monopoly on LNG exports from the country, however, the Russian Energy Ministry is now working on proposals to allow other Russian companies to export LNG and other hydrocarbons around the globe. Roseneft and Novatek are two Russian companies that have recently signed agreements to construct LNG export terminals in the country which currently only has one which is owned and operated by Gazprom,.

The Rosneft terminal will be built in partnership with ExxonMobil in the far east region of Russia and Novatek is in partnership with CNPC to construct the Yamal terminal.

To find out more about Russia’s impact on the energy market, you can read Russia: Impacts on the energy market.

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