Accessibility links

Breaking News

Lithuania: Gazprom Purchase Prompts Concern Over Russian Influence

Lithuania is selling a third of its biggest gas company to Russia's Gazprom. Last year, the Russian oil company Yukos became the owner of the biggest Lithuanian oil refinery. Some Lithuanian politicians say Russian companies are becoming major energy players in the country and are threatening its economic independence. Others argue that Russian capital poses no danger for the country, which is due to join the EU and NATO in May.

Prague, 13 January 2004 (RFE/RL) -- The Lithuanian government has announced it's selling a third of the state-controlled gas company, Lietuvos Dujos, to Russian giant Gazprom.

Lietuvos Dujos is one of the largest state companies in the country and the second big Lithuanian company to be bought by a Russian concern in a year. Last year, Russian oil giant Yukos bought the Mazeikiai oil refinery.

Reports say Gazprom will take a 34 percent stake for $37 million and guarantee natural-gas supplies for a decade. The stakes will be sold from the government's 58 percent holding. The German company Ruhrgas currently owns 36 percent of Lietuvos Dujos.

Gazprom is expected -- in conjunction with the German company -- to upgrade the local gas sector, extend the grid, and pave the way to connect the grid with the EU network.

However, some politicians and analysts are wary of the deal. They argue the move could make Lithuania vulnerable to economic pressure from Moscow.

The former chairman of the Lithuanian parliament, Vytautas Landsbergis, is a strong opponent of the deal. He says Gazprom is a state-controlled company and the move might be motivated more by political than economic concerns.

"We should avoid such Russian expansion in the energy sector, which is pre-planned, calculated, and which is also part of a political expansion seeking to increase Russian influence [in Lithuania]," Landsbergis said.

Landsbergis points out that in the past, Russian President Vladimir Putin has said Russia's policy aims could be achieved by using so-called "energy diplomacy." Landsbergis says anyone who thinks the deal is purely economic is "naive."

Vytautas Radzvilas, an analyst at the Lithuanian Institute of International Affairs in Vilnius, is also wary. He says in his mind, "there is no doubt" that Russia is seeking to maximize its influence through economic means. However, he says it is difficult now to predict the consequences of the deal.

He adds that the presence of the German company will make it difficult for the Russians to abuse their position.

A member of the Lithuanian parliamentary committee of economics, Birute Vesaite, says the deal shouldn't be viewed exclusively from what she calls "parochial" political considerations. She says it would be silly to build stumbling blocks for Russian capital just because it is coming from Russia.

"We have no other way out," Vesaite says. "Who are the main oil and gas suppliers [for Lithuania]? Of course they will not come from Western Europe, maybe later on when we have an infrastructure and communications. So, I think on the contrary, [the deal with Gazprom] is a positive move because the supplier of the raw material is coming to the country."

Lithuania may have no alternative. That's the view of Nicolas Redman, a Russia analyst at the London-based Economist Intelligence Unit. He says the country cannot afford to buy gas from the West when the Russian product is cheaper and closer.

Redman says Lithuania is not different from other Eastern European states -- future members of the EU -- that also depend on Russian energy resources.

He dismisses concerns over Russian economic penetration, saying such talk has lost its relevance with Lithuania's pending entry this year into the EU. On the contrary, he says, Lithuanian membership in the EU is one of the reasons why Russian companies are coming to the country. "Lithuania is moving toward the EU, it's not only an interesting market in its own right but it's also a springboard [to the EU markets]."