Natural resources and energy
Since Lithuania’s independence from the Soviet Union in 1991, Lithuania has struggled to reduce its dependence on Russian gas imports for its energy supply. When a new liquefied natural gas terminal was inaugurated in Klaipéda in 2014, the country’s opportunities to achieve this goal significantly increased.
Lithuania’s traditional natural resources are arable land, forest and peat. Smaller amounts of oil are extracted in the western part of the country, and oil has also been found in the Baltic Sea. Lithuania also has small natural gas assets. Building materials such as minerals, gravel, sand and cement are produced, also for export.
- COUNTRYAAH: Major exports by Lithuania with a full list of the top products exported by the country. Includes trade value in U.S. dollars and the percentage for each product category.
Lithuania’s great dependence on Russian oil and gas imports was created during the Soviet era (1944-1991). The privatization of the oil industry that took place after independence was supposed to reduce dependence on Russia. Instead, the sale caused a prolonged political battle over the Soviet-built oil refinery Mažeikių Nafta in Lithuania. Mažeikių Nafta was the Soviet Union’s most modern refinery and the largest company in the Baltic. It accounted for a tenth of Lithuania’s gross domestic product (GDP) and also included oil pipelines and the Būtingė oil terminal on the Baltic Sea coast.
Mažeikių Nafta, the Baltic’s only oil refinery, was sold in 1999 to the US company Williams International. As a result, Russia abandoned its oil supplies. Mažeikių Nafta suffered a loss until the Russian oil giant Yukos was admitted as a partner in 2002. Yukos modernized the company, made it profitable and guaranteed oil supplies. Williams sold his stake in Mažeikių Nafta to Yukos, who now became the majority owner. But when Yukos went insolvent through tax claims from the Russian state, Mažeikių was sold in 2006 to the Polish company PKN Orlen. Once again Russian oil supplies were abandoned, but in the mid-2010s the refinery was able to show a good profit.
- Abbreviationfinder: A popular acronym site in the world covering abbreviation for each country. For example, LT stands for Lithuania.Visit itypeusa for more information about Lithuania.
In 2002, part of the state-owned Lithuanian gas company Lietuvos Dujos was sold to German Ruhrgas and in 2004 Russian Gazprom also became part owner. The state still has a minority share. Gazprom significantly raised the gas price for Lithuania, which in 2012 paid the most for Russian gas in the EU.
For both political and economic reasons, therefore, Lithuania is trying to reduce its dependence on Russian energy through its own production and by connecting its electricity grid to the Nordic countries and the EU. In the autumn of 2014, a terminal for liquefied natural gas was installed in Klaipéda, which created the opportunity for Lithuania to import gas from, for example, Norway, thereby breaking dependence on Russian gas. Shortly thereafter, Gazprom agreed to lower the gas price by 23 percent.
Heat is mainly produced in oil and gas-fired power plants, while three-quarters of the electricity has long come from the Soviet-built nuclear power plant Ignalina. It was commissioned in the 1980s to supply power to the Baltic States, Belarus and Kaliningrad. Ignalina’s two reactors were then the world’s largest of its kind and were constructed in the same way as the Chernobyl accident reactors in Ukraine.
Following Lithuania’s independence, security at Ignalina was improved with the help of, among others, Sweden. However, in the negotiations for a Lithuanian EU membership in the early 2000s, the EU stipulated that Ignalina should be closed. Lithuania was forced to accept a closure since the EU had promised to partially finance the settlement. Lithuania fought hard to postpone the closure, but both reactors were shut down in 2004 and 2009, respectively.
Severe environmental problems, but improvements
Domestic political struggles and corruption had made Lithuania poorly prepared for a restructuring of electricity production after the closure of Ignalina. The country again became dependent on Russian gas imports. There have long been plans to build a new nuclear reactor in Visaginas, where the closed Ignalina is located. But the project has been plagued by political problems, both at home and with the intended partner countries Poland, Latvia and Estonia. Visagina’s future is uncertain since voters voted against the construction plans in a 2012 referendum.
In the same year, work began on building an electric cable between Sweden and Lithuania. It was put into operation at the end of 2015, while Lithuania could be linked to Poland’s electricity grid. Thus, Lithuania took another step to reduce dependence on Russian energy. The goal is that Lithuania, together with the Baltic neighboring countries, should be integrated into the European energy grid from 2025 and then completely detached from the dependence on Russian energy.
About one fifth of Lithuania’s energy needs are covered by renewable energy types, mainly biomass but also hydropower and wind power.
The environment in Lithuania suffered great damage from industrialization during the Soviet era. The Kaunas region, which has a number of large companies, was particularly hard hit. Wastewater treatment plants have been built in several major cities, often with the help of international financing, including from Sweden, and considerable progress has been made in improving air and water quality. In 2014, however, only a third of household waste was recycled.
FACTS – ENERGY AND ENVIRONMENT
Energy use per person
2,387 kilograms of oil equivalent (2014)
Electricity consumption per person
3821 kWh, kWh (2014)
Carbon dioxide emissions in total
12 838 thousand tonnes (2014)
Carbon dioxide emissions per inhabitant
4.4 tons (2014)
The share of energy from renewable sources
29.0 percent (2015)
Four-party government is formed
Social Democrat leader Algirdas Butkevičius forms government together with the Labor Party, Order and Justice and the Election Campaign for Poles in Lithuania.
No to a new nuclear reactor
The government is also losing the referendum on a new nuclear reactor. Almost 63 percent of the voters say no and 34 percent agree to a new reactor.
The opposition wins the election
In the parliamentary elections, the opposition Social Democratic LSDP becomes the largest party with 38 seats. The governing Confederation of Finland will be the second largest with 33 seats and the third will be the Labor Party with 29 seats. Order and justice receive 11 seats, the Liberal Movement 10, the Election Campaign for Poles in Lithuania 8, The Brave Road 7 and the Farmers ‘and the Greens’ Association 1 mandate.
The state sues Russian Gazprom
The state-controlled Russian oil and gas company Gazprom is sued by Lithuania before the Stockholm Chamber of Commerce Arbitration Institute for incorrect pricing. According to Lithuania, Gazprom has six times the gas prices between 2004 and 2012 and requires the company of EUR 1.45 billion.
The Minister of the Interior resigns
Interior Minister Raimundas Palaitis resigns after he dismissed the leadership of Prime Minister Kubiliu’s leadership of the country’s eco-criminal authority. The issue has been close to cracking the government coalition.