Implementation of EU Third Energy Package Directives in Lithuania

TGS Baltic assisted the Ministry of Energy of the Republic of Lithuania on all aspects of implementation of the Third Energy Package directives in the Lithuanian legal system and in the electricity and natural gas sectors.

The directives call for further reform of vertically integrated undertakings in the electricity and natural gas sectors to support the development of internal EU markets. AB Lietuvos Dujos, a vertically integrated Lithuanian gas company engaged in the transmission, distribution and supply of natural gas, is controlled by OAO Gazprom (38%) and E.ON Ruhrgas International GmbH (39%). The Lithuanian Government has a minority holding of 17%. The ownership unbundling of Lietuvos Dujos raised significant legal challenges, many of which had never been faced by an EU government.

The firm assisted the Government in discussions with the controlling shareholders of Lietuvos Dujos and with the European Commission's Directorate General for Energy regarding the specific steps to be taken to ensure implementation of ownership unbundling by the end of 2014. Both Gazprom and E.ON Ruhrgas strongly objected to the unbundling. Gazprom initiated aninvestment arbitration before the arbitral tribunal formed under the auspices of the Permanent Court of Arbitration in the Hague. Nevertheless, the general meeting of Lietuvos Dujos approved a plan for implementing the ownership unbundling and the company presented the plan to Lithuania's independent regulator on 31 May 2012.

TGS Baltic also represented the Lithuanian Government in the investment arbitration case before the arbitral tribunal formed under the auspices of the Permanent Court of Arbitration in the Hague.