For more details, also on the next steps in the investigation, please see the press release.
How the commitments would benefit the Lithuanian gas market
The Commission's main concerns are that Gazprom isolated the Lithuanian gas market and may have been charging excessively high prices in Lithuania compared to Western European benchmarks, especially liquid gas hubs.
The functioning of the Lithuanian gas market has improved in recent years. This is mainly due to the floating LNG terminal in Klaipeda. Today, Lithuanian customers can access global LNG markets, both in case of emergency and to seek alternative supply sources.
Despite those improvements and the termination of the Lithuanian gas supply contracts, Gazprom is a dominant player on the Lithuanian upstream wholesale gas market and Lithuanian customers continue to buy gas from Gazprom. The Lithuanian gas market remains largely isolated. This isolation results in part from Gazprom's territorial restrictions contained in its gas supply contracts with Central and Eastern European customers. Another reason is the lack of access to gas interconnectors between the Baltics and the rest of Central and Eastern Europe, which would enable more diversified gas imports.
Against this background, Gazprom's commitments provide a clear framework facilitating the free flow of gas across Lithuanian borders, and ensuring that Lithuanian customers could benefit from competitively priced gas now and in the future.
- Enables free flow of gas across Lithuanian borders –Gazprom will remove, once and for all, any market segmentation clauses in its gas supply contracts with Central and Eastern European customers, including of course with Lithuanian customers. This will enable the free flow of gas within Central and Eastern Europe. Lithuanian customers will be able to both export and import gas to/from other EU gas markets without any restrictions resulting from Gazprom's supply contracts.
- Ensures competitive prices in the Lithuanian gas market now and in the future – In the course of its investigation, the Commission found that the inability to refer to prices at competitive gas hubs was one of the key drivers of higher prices in Central and Eastern Europe. For any future long-term contract with Lithuanian customers, Gazprom has committed to enable them to ask for a renegotiation of their gas price, if it diverges from Western European price benchmarks, including prices at competitive gas hubs. Such contractual price revisions would be available frequently and their timing would be streamlined. And of course, a better integrated Central and Eastern European gas market, helped by Gazprom's commitments, is in itself a driver to ensure competitive prices.
- Creates opportunities for more gas flows to Lithuania – As mentioned, the Baltic gas markets are still largely isolated from the rest of Central and Eastern European gas markets in terms of gas connecting infrastructure. Lithuanian customers are limited in their ability to seek alternative gas suppliers other than in its neighbouring Baltic states, because those suppliers do not have access to infrastructure which allows them to ship the re-sold gas to Lithuania. Gazprom will offer swap-like operations, which would enable its customers to bring gas originally contracted at selected delivery points to Poland and Slovakia to be instead brought to Lithuania. This will allow Lithuanian customers to seek alternative suppliers of gas in advance the gas connecting infrastructure linking the Baltic States with the rest of Central and Eastern Europe (planned GIPL pipeline) becoming accessible.