Latvia Seeks to Allay Estonian Fears Over LNG Terminal Plan

Latvia’s Economy Minister Artis Kampars said the country’s plan to build a regional liquefied natural gas terminal utilizing its existing underground gas storage unit won’t favor Russia’s Gazprom OAO (GAZP), seeking to allay Estonian fears over the proposed venture’s independence.

The natural gas storage infrastructure is publicly owned and “therefore there is no reason for concern about any privileges in Latvia’s gas market for Russia’s Gazprom and companies aligned with it,” Kampars said in a statement yesterday on the ministry’s website.

Gazprom, Russia’s gas export monopoly, is the sole supplier of natural gas to Estonia, Latvia and Lithuania, mainly through the Incukalns storage facility. The Baltic countries, which have uneasy political relations with their larger neighbor, are seeking European Union support for building an LNG terminal in the region, citing higher gas prices than in western Europe and security of supply risks. Still, they have not agreed on a single location.

Kampars’s statement came after his Estonian counterpart Juhan Parts sent a letter last week that raised concerns about Latvian plans to build an LNG terminal in Riga that would use the Incukalns facility. Latvijas Gaze AS, which is 34 percent owned by Gazprom, has an exclusive contract to use the facility until 2017.

Security of Supply

Latvia has geological formations that allow for the creation of natural-gas storage facilities with an estimated total capacity of up to 50 billion cubic meters, according to Latvijas Gaze’s website. This is about 10 percent of the European Union’s annual consumption, and almost equal to the EU’s total storage capacity, it said.

“From Estonia’s perspective the planned LNG terminal in Riga working together with underground storage would not increase the security of gas supplies in Estonia: we would still be dependent in our gas supplies only from underground storage as we are today,” Parts said in a letter dated July 22 and forwarded to Bloomberg by Estonia’s Economy Ministry.

A feasibility study carried out by a consortium of British companies GL Noble Denton and Energy Contract Company suggested building one LNG terminal in the Baltic countries to be located in Latvia to use its infrastructure, according to the Latvian Economy Ministry.

To contact the reporters on this story: Ott Ummelas in Tallinn at oummelas@bloomberg.net; Aaron Eglitis in Riga at aeglitis@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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