Lithuania Signs New Price Deal With Gazprom

Reuters (VILNIUS)-Russian gas monopoly Gazprom has signed an agreement on gas supplies to Lithuania, the Baltic state's gas utility said on 24 January. Lithuania consumed 3.6 billion cubic meters of Russian imported gas last year. "We have learned that the amendment to the long term natural gas supply contract has been signed in Moscow, but we have not received the document yet," said Lietuvos dujos representative Sigita Petrikonyte-Jurkuniene. The amendments set new prices and gas supply volumes for this year, while the long-term contract expires in 2015, she added, declining to provide further details. Latvia's gas company said that in December it had struck a gas supply deal with Gazprom 2008 through 2010, which would lead to a rise in prices of up to 50 percent. (Reliability: 8)

Analysis:
Lithuania energy prices are likely to increase significantly over the next seven years of the contract.Gazprom stated they were doubling gas prices in 2008 from 2007. (Analytic Confidence: 5)

Nuclear Plant Partners Face Hurdle

Financial Times (VILNIUS)-The Baltic States and Poland are struggling to settle the political, commercial and environmental problems involved in their joint plan for a USD 7 billion nuclear power station, aimed at easing expected regional electricity shortages and reducing dependence on Russian energy. The 3,200-megawatt plant built at an ageing Soviet-era nuclear power station at Ignalina, Ignalina, which is due to close in 2009 in line with European Union requirements. The partners are planning for the new plant to start operating in 2015, but industry executives say the deadline is tight. Lithuanian officials, who with Ignalina's looming closure have the strongest interest in pressing ahead. (Reliability:8)

Lithuanian Financial Minister Rules Out Currency Devaluation

Guardian Unlimited (BRUSSELS)-Lithuanian Finance Minister Rimantas Sadzius on 22 January ruled out currency devaluation in his fast-growing Baltic country. Lithuania burdened with high inflation and a widening current account deficit. Sadzius said global financial turmoil did not increase the risk of a hard landing in Lithuania and two other Baltic countries, Estonia and Latvia -- all European Union newcomers with currencies pegged to the euro and economies expanding fast. Soaring inflation in December and expectations of more price pressure in 2008; renewed financial market speculation this month that currency devaluation was a real risk in one or more of the three Baltic States. (Reliability: 8)


Comment:

Credit rating agencies have cited a widening current account deficit as one of the signs that Lithuania's economy risks overheating and a hard landing.Lithuania's current account gap widened by 79.5 percent to USD $594 million in November from the previous month and was up 11.5 percent on the year. Officials have said the rate could hit 10 percent in the first half of 2008.

Lithuania Ups Consumer Price Index, GDP

Guardian Limited (VILNIUS)-Lithuania's central bank revised up on 25 January its forecasts for inflation and economic growth in 2008, but said it expected a gradual slowdown in activity that would avoid a hard landing and crisis. The bank forecast annual average inflation would hit 7.9 percent in 2008, up from a 5.7 percent forecast made three months ago. Surging food and utility costs pushed the consumer price index up 8.1 percent year-on-year in December, the biggest jump in a decade. (Reliability: 8)

Russian Security Officer Convicted Of Spying For Lithuania

Pr-Inside.com (Moscow)-A Russian security officer convicted 17 January of spying for Lithuania and sentenced to 7½ years in prison, a duty officer for the Federal Security Service said. Lt. Col. Vasily Khitryuk, of the Federal Prison Service, convicted in Kaliningrad, the Baltic exclave where arrested in 2006. The court found that Khitryuk recruited by the intelligence services of Lithuania, which borders Kaliningrad, and had passed along information about Russian military units. Russia and Lithuania strained since the Baltic country regained independence from the Soviet Union in 1991. Over the past seven years, there have been several incidents of tit-for-tat diplomatic expulsions. Lithuania joined NATO and the European Union in 2004. (Relability: 8)

Analysis:
It is likely that Lithuania and Russia tensions will continue to rise due to the fact that Lithuania is demanding compensation for Soviet occupation and the continued mistrust between both countries since the Soviet Union fell in 1991.

Baltic Leaders Press For End To US Visa Restrictions

EUbusiness (VILNIUS)-The presidents of the Baltic states on 16 January pressed for an end to entry restrictions on their citizens travelling to the United States. In a joint statement to mark the 10th anniversary of a US-Baltic defense pact, Valdas Adamkus of Lithuania, Toomas Hendrik Ilves of Estonia, and Valdis Zatlers of Latvia said that dropping visa hurdles for "the proven friends of the United States in Europe will further the spirit of modern partnership between our countries and fulfill the vision of transatlantic alliance". However, unlike citizens of most other EU member countries in Western Europe, nationals of the Baltic States must obtain visas to enter the United States, even though it is easy for US nationals to travel in the opposite direction

Comment:
The US requirements are partly a result of concerns that citizens of states where living standards are lower than in Western Europe sometimes remain in the United States after their visas have expired, taking advantage of a tourist trip to migrate illegally.

Consumer Prices In Lithuania Increase 0.8 Percent

Forbes (VILNIUS)- In Lithuania the projected consumer prices are set to rise by 0.8 percent in January compared with December, BNS news agency reported, citing the Statistics Department. The annual inflation rate forecast is at 9 percent this month and the average annual inflation rate at 6.2 percent, it said. Bronislava Kaminskiene, head of the department's Econometric Research Unit, stated, “Big discounts on clothes and footwear have offset rises in prices for other groups of goods and services, such as food, alcohol, housing and transport. The rises were quite sharp due to increased excise duties on motor fuel and alcohol and hikes in heating and natural gas prices." (Reliability: 8)