Lithuania Wants Speedier Gas Market Reforms in Latvia

State-owned Lithuanian firms are seeking to buy a majority stake in the country's gas utility company Latvijas Gaze to speed up market reforms to fully benefit from new liquefied natural gas (LNGLF) (LNG) imports, the energy minister said.

Two state-owned firms, Lietuvos Energija and EPSO-G, submitted non-binding bids to buy a 47.2 percent stake in Latvijas Gaze from Germany's E.ON in September.

"Yes, they are taking part (in the tender)," Energy Minister Rokas Masiulis told Reuters on Monday.

"Our main goal is to liberalise Latvia's market, and this (share purchase) is one of the means to help the liberalisation," he said.

The purchase would give Lithuanian firms the biggest say in managing the company, 34 percent owned by Russia's Gazprom and 16 percent by gas trader Itera Latvija.

So far Latvijas Gaze has opposed plans to liberalise the market, warning that the move could lead to higher gas prices.

Latvia's government has postponed gas market reforms until April 2017, seeking to avoid a spat with the shareholders, including its current sole gas supplier Gazprom.

Latvijas Gaze's monopoly limits Lithuania's possibilities for selling LNG in Latvia or to ship it to Estonia, the gas trader Litgas said.

"Latvia hasn't liberalised its gas market... the conditions for transporting gas to Estonia or selling gas in Latvia are unclear," Litgas's chief executive, Andrius Tuckus, told Reuters.

Lithuania's new LNG terminal has a capacity to import up to 4 billion cubic metres (bcm) of gas annually, enough to meet about 80 percent of all the Baltic states' needs.

But its supply flow will be limited to 2 bcm until at least the end of 2015 because pipelines will be insufficient to ship much gas to Latvia and because Latvia still operates a closed gas market.

The European Commission has said Latvia should ensure clear third-party access to the 2.3 bcm Incukalns storage facility and its gas grid for all market players.

But Latvia has postponed liberalisation until April 2017, when the exclusive rights of Latvijas Gaze to operate Incukalns are due to end.

Greater access to Incukalns could also allow Lithuania to buy cheaper gas during the summer and store it for winter use, thus reducing the price for consumers.

Tuckus said access to Incukalns presently is ensured only through talks with Latvijas Gaze and the conditions given to other customers are not transparent.

E.ON has put up for sale its stake in Latvijas Gaze as a part of its move to get out of gas utilities in the Baltic states and Finland.

Germany's biggest utility sold holdings in Lithuania and Estonia earlier this year.

(Reporting by Andrius Sytas; Writing by Nerijus Adomaitis; Editing by Greg Mahlich)