Chevrons Lithuania Pullout

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July 15th, 2014 12:05am

Chevron’s Lithuania Pullout

If there was a glimmer of hope that Chevron Corp. would have gotten hooked by the more flexible new Lithuanian shale gas exploration and mining legislation and will stay in the Baltic country until a repeat tender is announced, now the hope-and Chevron-are gone.

The US energy giant has announced of closing its office in the Lithuanian capital Vilnius and selling its stake in the Lithuania-based oil company LL Investicijos.

Chevron pulled out from Lithuania last October, citing the complexity of the country’s shale gas exploration and extraction legislation and the multiple legislative amendments to it.

“The Americans have been mulling withdrawing from Lithuania long time ago, right after the first tender did not work out for the company. But ever since the Lithuanian government would be trying to calm Chevron by saying it will do whatever it takes to put the legislation in order and announce a new tender, which was scheduled for early spring or summer at latest. The US company has got fed up with the futile promises and is leaving Lithuania now for good,” a source in the Lithuanian Environment ministry said to Natural Gas Europe.

The 50 percent stake in LL Investicijos Chevron had acquired in October, 2012 from the other shareholder, Lithuania’s Tan Oil. LL Investicijos has a required license for shale gas exploration and mining in the Rietavas strip in southwestern Lithuania.

“Chevron closed its Lithuanian office because the possibilities the country provides company are not more favorable than those offered by our global investment portfolio,” Cameron Van Ast, Chevron’s spokesman for the representation in Poland, was quoted as saying by the Lithuanian news agency BNS.

The Chevron pullout history and the entire shale gas exploration history in Lithuania has been the scrap of litmus showing the Lithuanians’ “bizarre” ability to absorb novelties and sort out the wheat from the chaff, after the Chevron statement insisted Valentinas Mazuronis, the former Environment minister and one of the staunchest supporters of the shale gas bid and Chevron.

“We ought to say this clearly: all of us here have lost this round. Part of us (lost) because of the lack of understanding and the conviction that they defend Lithuanian nature and local people’s health; part (lost) because of the greed, stemming from the belief that (with the Chevron arrival) it will start pouring money. Maybe a part has been enticed and cajoled by some forces having their own interests and plans, which have nothing to do with the Lithuanian wellbeing,” the former-minister-elected-EU-parliament-member reasoned.

But the failed shale gas bid has not been exception to the Lithuanian mentality, he claimed.

“Whatever we’d try to do- be it waste incineration, construction of a cattle breeding facility or foundation of an industrial body- we hear first of all an angry “No!,” Mazuronis noted.

According to him, if such a powerful company like Chevron lost its patience with Lithuania, a bunch of smaller investors out there are doomed (in Lithuania) from the outset.

“Look, after an investor shows up, a swarm of competitors do whatever they can get local communities bristling against it, and state institutions as well as law enforcement agencies are being opposed to it…It is urgent to change all that as at the end of the day we all lose here,” the europarliamentarian urged.

Calling the Chevron departure “a fragmentic loss”, he prompted “everyone” to think of what has been done and what lies ahead.

“The conclusions we ought to make should be addressed to the future and the understanding that we live in the 21st century when competing with the neighbors (Mazuronis had in mind smooth operations of a shale gas undertaking in Poland) is extremely hard,” he said.

Meanwhile, Andrius Kubilius, the former Lithuanian Prime Minister and the Conservatives’ leader, slagged off the incumbent Social-Democrats-led government, saying it has not mustered “sufficient political will and courage” to withstand the lobbyists’ and shale gas bid opponents’ aggressive tactics.

“The government has promised to put in order the shale gas legislation within a year, but that did not happen…With the Chevron leave Lithuania has not only lost a quarter billion litas (100 million USD), but also has harmed future investors’ interest in Lithuania and cut the state’s future revenues,” Kubilius said.

Meanwhile, the Lithuanian Parliament’s vice chairman Algirdas Sysas, a Social Democrat, has welcomed Chevron’s pullout, calling it “a victory” of the people who protested against the Americans’ proposed way of exploration-fracking.

“Alike they, I do believe that such technologies in such a small country like Lithuania (is) are unacceptable…and we can watch what is going on with the process in other European countries from different points of view…So far, only Britain can boast of having found large shale gas resources, nowhere else were they found,” Sysas told Natural Gas Europe.

Meanwhile, Lithuanian Prime Minister Algirdas Butkevicius insisted that Chevron retreat will not ill-effect the Lithuanian shale gas exploration plans.

“The Environment ministry is obligated already in the fall to announce a new competition…There have been necessary shale gas legislation amendments prepared, which are already approved by the Government’s Strategic Committee. We believe that all the necessary additional legislation will be passed until the tender is announced,” Butkevicius said.

The legislative proposals among other foresee that shale gas extraction will be tax-free for three or four years since the start as a modest 15 percent tax will be applied thereafter.