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Monday 21.05.2018 | Name days: Ingmārs, Ernestīne, Akvelīna
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Economic Diary of Latvia. Can Latvia become an oil superpower?

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUUnder the influence of mutual sanctions between Europe and Russia, Latvia’s trade-economic activity more and more noticeably leans towards the Near East and Asia.

This week marked the launch of work of Kazakhstan’s Trade Mission in Riga. As part of it, a large business forum took place. For the first time since the establishment of mutual relations between Latvia and Kazakhstan a group of businessmen from Astana Almaty and other towns arrived in Riga without an official visit – there are no representatives from state structures among participants of the mission. This is the first visit of Kazakh businessmen organized by their own initiative. It is also the first such European visit.

Participants of the forum discussed matters related to the expansion of cooperation between the two countries in different areas, mainly in the sphere of investments, development of free economic areas and Latvia’s possible participation in the New Silk Way.

Representatives of 15 Kazakh companies arrived in Riga to participate in the forum and discuss cooperation options. Guests of the forum represented a wide range of economic industries: machine-building, metallurgy, chemical, construction, pharmaceutical and food industry. Businessmen from Kazakhstan held talks with Latvian wholesale and trade and distribution organization on possible supplies of products. Meetings were also held at the Healthcare Ministry and Agriculture Ministry.

Kazakhstan is Latvia’s largest trade partner in Central Asia. Foreign trade volume between these two countries was USD 161.2 million in 2015. Of that amount, Kazakhstan’s exports to Latvia reached USD 121.1 million.

The two countries successfully work together in transit and logistics sector. Kazakhstan is on the third place in terms of import volumes and fifth place in terms of export goods carried by rail. Kazakhstan also has its own terminal at Ventspils port – it is the only Kazakh terminal in Europe that handles grains transports to other countries around the world.

Cooperation is also performed in the sphere of woodworking, pharmaceuticals, food industry and other sectors. Kazakhstan has more than 60 joint companies that employ capital from Latvia. The number of Latvian companies with Kazakh capital has increased four times since 2010.

47% of Kazakhstan’s turnover of goods applies to the European Union. It is the only country that has an agreement with the EU in regards to expanded partnership.

The agreement on development of cooperation and business contacts between Azerbaijan and Latvia was signed this week. The document was signed on the sixth meeting of the inter-governmental commission for economic, scientific, technical and cultural cooperation between the Republic of Azerbaijan and the Republic of Latvia. At this event, Azerbaijan was represented by the country’s Transport Minister Ziya Mammadov. Latvia was represented by Transport Minister Uldis Augulis. While talks continue in regards to enhancement of relations in the sphere of dairy product processing, development of cooperation continues in agriculture and food product production.

Latvian dairy processing company Food Union continues expanding the export network in the Near East. The company has launched exports to Iraq by supplying the first seven ton of ice cream to this country. Dairy products produced in Latvia will be available in more than 200 cities across the country. The current contract with Iraq states that the production plant will be supplying at least 20 tons of dairy products and ice cream every month.

Black gold of the Baltic Sea

In general, Latvia’s efforts to explore countries that have not been active trade partners until now can have a more symbolic meaning. The aforementioned countries produce oil – something Latvia has a lack of. But only for now. Information regarding deposits of high-quality oil under the Baltic Sea has been circulating since the middle of the 20th century. In 1975-1985, survey of oil deposits in the Baltic Sea was being carried out by a joint Polish-German-Soviet company – Petrobaltic. It managed to drill 28 boreholes and find 8 oil and gas deposits. According to estimates of the Latvian government, the Baltic Sea holds deposits worth approximately 250 million barrels of Brent oil worth USD 6 billion.

Russia and Poland already harvest oil from the oil shelf of the Baltic Sea. Lukoil is in charge of that in Kaliningrad Oblast and Lotos Petrobaltic is the company in charge of its in Poland.

This week, Latvia’s government updated the composition of the work group for holding talks with the government of Lithuania in regards to economic cooperation in an exclusive economic area and the continental shelf of the Baltic Sea. All this may sound complicated but it is worth keeping in mind that this work group will perform analysis use of resources, evaluation of regulations and licensing policy in the sphere of production of hydrocarbons in the border zone. This once again actualizes the matter regarding the division of responsibilities between Lithuania and Latvia in regards to oil production in the Baltic Sea. To become an oil-producing country means climbing a whole new level.

The first ambassador

Those are by brave fantasies. One should remain in reality to keep a cool head and a firm grasp on things. It is in this reality and this week that Saeima’s Foreign Affairs Committee approved Latvia’s ambassador to the Organisation for Economic Cooperation and Development Ivita Burmistre. OECD now has to approve her on their side.

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