If LatRosTrans co-owner Transneft decides to cease oil product exports through Baltic ports, LatRosTrans will no longer be sustainable, says the company’s council chairman Robert Kirkup.
He says LatRosTrans had experienced a major transport volume decline in 2016 – from 4.7 million tonnes of oil products in 2015 to only 3.6 million tonnes last year. The company worked with a degree of profits, which was largely thanks to reduced costs.
«We hope that our processed volumes will increase slightly in 2017. This, however, depends on many factors outside our control. We do consider using the oil pipeline for other purposes, such as gas transports. We do not have anything specific to say about it at this point, however. The largest matter at the moment is the litigation with Belarusian Polocktransneft Druzhba in relation to the oil in Polock-Ventspils pipeline. The Supreme Court has sent this case back to Latgale Regional Court for review. A possible negative outcome would be a major threat for the company,» Kirkup said.
LatRosTrans co-owner Transneft has announced that it will cease oil exports through Baltic ports by 2018. According to Kirkup, if this happens, LatRosTrans will no longer be sustainable.
«We all know about Russia’s plans to divert oil products to its own ports. It has been expected for years. Nevertheless, we continue working as is. We are confident that we can offer export corridor at the most competitive prices. On the day we become non-competitive, geopolitical factors will have won. This is why we should preserve our competitiveness to ensure we have the best possible export corridor,» said the company’s council chairman.
When asked if a company has a plan B, he said the matter is what can be done with the oil pipeline if there is no oil to transport. «This requires a complex solution. The pipeline can be used for gas transport. We all know that Latvia has regions without gas supply. But this is where we would need gas transmission infrastructure. At the same time, as far as I’m aware, EU funds are available for gas projects. It is also possible to transport oil to Ventspils and then use the pipeline to transport oil to Belarus. But this solution would require major investments – possibly 100 million euros. On top of that, it would be necessary to replace pumps along the entire length of the pipeline, fill the pipeline with oil and hand over the oil to the buyer on the other end. So there is no simple solution at the moment,» Kirkup said.
Talks are being carried out with Orlen in Poland in regards to diesel fuel exports to Ventspils through the oil pipeline, not just the railway. «I will admit that we have been talking about this for at least seven years, if not longer. This is largely a political matter, because it is necessary to involve the Latvian government and Lithuanian railway, who are understandably interested in involving their ports. Financially speaking, exports of diesel fuel through the oil pipeline to Ventspils would be the best solution, but we cannot influence decisions of other companies and other governments,» said the company’s council chairman.
«With that, we see low opportunities in regards to other uses of the oil pipeline,» Kirkup adds.