U.S. oil and energy giant Chevron on Tuesday decided to withdraw its bid to explore for shale gas in Lithuania due to new regulations.
"Significant changes to the fiscal, legislative and regulatory climate in Lithuania have substantially impacted the operational and commercial basis of the investment decision," the company said in a statement.
Chevron Exploration & Production Lietuva -- registered in Lithuania ?- was eyeing a field in the west of the country believed to contain deposits of shale gas and shale oil.
The company said it would focus on an existing investment in another field, after it bought 50 percent of shares of a small Lithuanian company in October 2012.
Prime Minister Algirdas Butkevicius said Tuesday he regretted the move, but admitted Lithuania has yet to adopt laws on shale gas extraction.
"We regret the company's choice but we understand they have the right because parliament is still considering laws affecting fossil fuels in our country," he said in a statement.
Butkevicius, who has backed the bid, said 25 pieces of legislation on shale gas extraction are still in the works.
Earlier this year, Vilnius tightened environmental rules after protests erupted against hydraulic fracturing, or "fracking", a controversial technology used to extract gas from shale.
Some lawmakers also want to increase taxes on shale gas.
Entirely dependent on natural gas from Soviet-era master Russia, Lithuania has long been determined to find alternative sources of energy.
Lithuanian officials believe the nation of three million people could have between 30 to 50 billion cubic metres (1,000 to 1,800 billion cubic feet) of extractable shale gas reserves.
Russian energy giant Gazprom pumped 3.3 billion cubic metres of natural gas into the Baltic state last year.
Vilnius is determined to break Gazprom's politically-charged monopoly -- a legacy of Soviet-rule -- by building a liquefied natural gas terminal, expected to be up and running by late 2014.
[Image via Agence France-Presse]