Gazprom eyes strategic utility, maybe a lot more in Lithuania

Gazprom submitted a final bid for 34 percent of Lithuanian utility Lietuvos Dujos on Friday, officials said. Sources close to the deal said Gazprom was sticking to its earlier 80 million litas ($22 million) offer for the stake, declining to raise it closer to the 116 million litas that Lithuania had asked for, or to pledge lower prices for gas supplies. Privatization officials said one to two weeks would be needed to determine whether the bid met all the established criteria, one of which was a 10-year gas supply agreement. The Lithuanian government has pushed back deadlines in the tender three times at the request of Gazprom, its only source of natural gas and the sole bidder for the stake, while threatening to put the sale on ice if an initial offer was not improved. A German consortium of Ruhrgas and E.ON Energie bought an equal 34 percent of Dujos from the state last May, paying 116 million litas. But although Gazprom appears to be seeking the stake at a bargain price, it might be holding out a sweetener behind closed doors to tempt the Lithuanian government to accept. Gazprom has long mulled a new pipeline to feed the growing gas markets of Western Europe, and Lithuania is eager to have the pipeline running through its territory and get a piece of the pie. Dujotekana controls about two-thirds of Lithuania's natural gas market at present and Lietuvos Dujos about a quarter, with the market share of both essentially determined by annual quotas set by Gazprom. Terms of the privatization require Gazprom to boost Dujos' market share to about 50 percent now and more in future. Dujotekana has said that it expected over time to be acquired by Gazprom.