bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Saturday 19.10.2019 | Name days: Drosma, Drosmis, Elīna
EstoniaEstonia

Foundation: LNG projects in Latvia and Lithuania can be mutually compatible

FaceBook
Twitter
Draugiem
print
(+3 rating, 3 votes)

BNN news from Latvia and Baltics, LNG terminal

Projects of liquefied natural gas (LNG) reception terminal with a re-gasification plant can break Gazprom’s monopoly in the three Baltic States and Poland, creating a competitive regional market through supply diversification and mutual interconnection, reports Jamestown foundation.

The desired time-frame for commissioning is 2014-2015. Poland, Lithuania, and Latvia are each planning to build a liquefied natural gas (LNG) reception terminal with a re-gasification plant on their Baltic littorals at Swinoujscie, Klaipeda, and near Riga, respectively.

However, the three projects’ aggregate capacities, as presently envisaged, far exceed Lithuania’s, Latvia’s, and Estonia’s aggregate gas consumption requirements. This dilemma is probably inevitable. LNG projects are generally considered commercially viable at no less than 4 billion cubic meters (bcm) per year in re-gasification capacity. Thus, the projects may end up competing against each other over investment funding and over political support in the Baltic capitals and in Brussels. Perceptions of mutually inflicted redundancy can doom these projects before they ever start.

The European Commission considers a partial solution to this dilemma. It supports construction of interconnector pipelines for re-gasified LNG, from the Baltic terminals to other parts of an evolving European energy market. This would allow the imported gas to flow southward into Central Europe, alleviating the inlands’ dependence on Gazprom. The link to Central Europe can also ensure commercial viability of the three LNG projects in the Baltic region, avoiding redundancies there. The European Union’s first-ever energy summit, held in Brussels on February 4, endorsed construction of such North-South interconnectors. Financing has yet to be found, however; and EU political support seems more focused on Poland’s Swinoujscie LNG project (and a North-South interconnector from Poland), than on the Lithuanian or Latvian LNG projects (Euractiv, February 7).

As a more immediate concern, Latvia’s current government (firmly pro-Western and battling corruption) needs to make clear that it has abandoned the idea of inviting Russia’s Gazprom or its affiliate, Itera, to build the LNG terminal in Latvia. Some Latvian politicians and interest groups had discussed this project in Moscow, along with a proposed gas storage site in Latvia. These proposals continue to distort the debates in public opinion and business circles in the Baltic region.

On February 10, Latvian President, Valdis Zatlers, declared that the state-owned electricity company Latvenergo (i.e, not a Russian company) would be commissioned to build the proposed LNG terminal near Riga; and that the terminal would be linked with the pipeline systems of neighboring Baltic countries and the European market at large. Zatlers spoke while visiting with Lithuanian President, Dalia Grybauskaite, in Vilnius. The Lithuanian side welcomed these assurances, which it had awaited for some time (BNS, Delfi, February 7-10).

The Lithuanian government had recently expressed serious concerns about a possible Russian-controlled LNG terminal in Latvia. Such a project (or its serious consideration) could doom Lithuania’s LNG project to redundancy, while aggravating dependency on Gazprom in the Baltic region. The Latvian government will now be expected to substantiate President Zatler’s position that Latvia would pursue a European solution to gas supply security.

An LNG terminal built and controlled by Gazprom (or its affiliate Itera) would strengthen Gazprom’s position in the Baltic region. The Russian side wants a dual-capable terminal, not only for import, but also for exporting Gazprom’s own gas in the form of LNG in the future. It would integrate the LNG terminal with the pipeline operator, Latvijas Gaze, which is jointly owned by Gazprom/Itera and its German ally E.ON Ruhrgas. Such arrangements would enable Gazprom to block, or shape, decisions regarding gas export-import operations, prices, and the transmission of gas, in its own interest.

To facilitate such arrangements, the Russian side has proposed to build a massive underground site in Latvia for storage and for the re-export of Russian gas. Some have argued that the storage would improve the country’s supply security, earn revenue for Latvia, and provide gas for planned construction of power and heating plants. More likely, however, it would undermine Latvia’s and the region’s supply security by reinforcing Gazprom’s monopoly position, pre-empting the Baltic States’ markets, and discouraging diversification efforts.

Latvia’s geology is uniquely suited for underground gas storage. This could become an incentive for building an LNG terminal in Latvia with European investors and enlisting the European Commission’s support for the project. To qualify for such support it needs the status of a regional or common European project, which would be ruled out if Gazprom gets involved in the project. Moreover, (as Zatlers noted while in Vilnius) Latvenergo itself is interested in gas supply diversification and competitive prices through access to LNG. This electricity company is Latvia’s largest gas consumer by far.

The gas-trading and pipeline-operating company, Latvijas Gaze, is controlled by Gazprom and its Itera affilate with a combined 50 percent of the shares; E.ON Ruhrgas holds another 47 percent. Gas market reform through “unbundling” (separating supply from transportation) is mandated by EU law, and would make the LNG project substantially more credible. Estonia and Lithuania are now taking steps in that direction. Lithuania has requested assistance from the European Commission for unbundling and de-monopolization of the gas market (Postimees, January 27; EDM, February 10).

In Vilnius, Presidents Grybauskaite and Zatlers agreed that the respective LNG projects can be compatible with each other if pursued as elements of an interconnected regional market, with a regional commodity exchange for gas, and linked via Poland with the wider European market (BNS, Delfi, February 10). This political consensus at the presidential level is expected to be followed up by governmental decisions. The Latvian government in particular needs to substantiate Zatlers’s assurances about Latvia’s choice. This should rule out Gazprom’s or its proxy’s involvement in the project, guarantee the terminal’s use for imports only (not exports), and exclude linkage with a Gazprom-proposed storage site. This approach, along with energy market reform through unbundling, could facilitate EU support and European investments for both projects.


Leave a reply

  1. Valery Gaponenko says:

    Not the governmental organization the International Fund MIERS
    Riga Latvia has made to the Government of Russia the alternative offer
    On construction of LNG Plant in Latvia.
    The offer is the optimal before others and has interest
    of the European investors.
    The offer provides import and export of LNG and other geopolitic interest of Russia on Baltic.
    It will provide the priority of the project of fund MIERS before other offers.
    We are open to contact with Investors.
    rigasfi@gmail.com

Ventspils rushes to extend Lembergs’ mandate in freeport

The Ventspils City Council has summoned an emergency sitting to decide on the extension of the mandate in the board of the Ventspils Freeport Administration to suspended Mayor Aivars Lembergs, as well as Jānis Vītolņš, Didzis Ošenieks and Guntis Blumbergs, according to information seen by the BNN.

Estonian pension reform expected later in 2019

The pension reform of Estonia should be adopted later this year to start it in 2021, believes Estonian Social Affairs Minister, who has pointed out that the country’s ruling coalition has reached an agreement on the core issues of the reform.

Latvian minister: Less than half of Latvian nationals in UK have applied for residence

Latvian nationals in the UK should take into consideration different scenarios possible after Brexit and to protect themselves they should register their place of permanent residence with the British Home Office, said the Latvian Foreign Minister to Latvijas Radio.

Verdict in Latvenergo bribery case enters into force with prison sentences

A Latvian court ruling in one of the bribe-taking cases of state energy producer Latvenergo has entered into force. According to the verdict, prison sentences have been given to Latvenergo’s former vice-president, its former director of production and the head of the firm Energy Consulting.

Latvian football loses its head as Gorkšs ousted from federation chair

The turbulent Latvian Football Federation (LFF) has voted in an emergency meeting to remove its president Kaspars Gorkšs from office.

Latvian top companies by value – Latvenergo and Latvijas valsts meži

Energy producer Latvenergo, forestry company Latvijas valsts meži and computer network equipment maker Mikrotīkls had topped the list of the Top 101 Latvian companies, compiled annually by Nasdaq Riga and Prudentia.

Turkey agrees to pause its intervention in Syria for five days

Turkey, Kurdish SDF forces and the U.S. have reached an agreement to introduce a five-day ceasefire to allow Kurdish forces to retreat from the Turkish-Syrian border.

High-ranking Latvian policeman detained over bribery

The Latvian Internal Security Bureau (IDB) has detained on suspicion of bribery three persons: the deputy chief of the Public Order Police Bureau of the Latgale Regional Administration of the State police and two private individuals, including one former policeman.

Saeima greenlights opening of regional gas market

The Latvian Saeima has on Thursday, October 17, adopted amendments aimed at removing obstacles to the creation of a regional gas market and ensuring the functioning of the joint Latvian, Finnish and Estonian tariff system from January 1, 2020.

Lithuanian President Nausėda‘s 100 days in office: nothing messed up, communication improved

Lithuanian President Gitanas Nausėda is marking this week the first hundred days of presidency. Both his supporters and ready-to-bite analysts agree than he has not messed up things, although some frown at his conformity with the Farmers and Greens Union-orchestrated Seimas and the Government.

Fragile, new Brexit deal reached between EU and UK

In the European Union’s negotiations on the withdrawal of the United Kingdom, a new agreement has been reached on the day a decisive EU summit commenced in Brussels.

Court proceedings of Lembergs could restart only in 2020

The Riga Regional Court ruled on Thursday, October 17, that the lawyer of criminally-accused Latvian politician Aivars Lembergs has been given until January 2020 to read the materials of the case.

Latvia decides: Non-citizen children to receive citizenship from 2020

The Latvian parliament passed in the final reading on Thursday, October 17, the draft law that sets forth granting citizenship to new-born children of the non-citizens of Latvia.

Drugstores should focus on health care over money-making, Estonian Minister says

As Estonia is working on a pharmacy regulation reform aimed at reducing the influence of drug wholesalers on pharmacies, Estonian Social Affairs Minister Tanel Kiik has said pharmacy services ought to be focused on healthcare instead of business.

Confiscated EUR 29 mln: Latvia waiting for evidence from Ukraine

As Ukraine seeks to recover from Latvia 29 million euros that have been confiscated by a Latvian court, Ukraine has to provide evidence as it has promised to do, according to Latvian President Egils Levits.

E-commerce for prison inmates considered in Estonia

Estonian prisoners could be allowed to buy products using rather than using current prison shops, such is the option considered at the country’s Centre of Registers and Information Systems.

Riga to keep cooperating with ticket servicing firm, allocating EUR 20.6 mln

Rīgas satiksme, the transport company of the Latvian capital, will not terminate cooperation with SIA Rīgas karte, meaning that the population would pay 20.6 million euros for it.

Video: Evacuation in Lithuania amid fire at tyre recycling plant

Alytus in southern Lithuania was hit by a cloud of black smoke from a fire at a large tyre recycling plant. A hospital nearby has been evacuated.

Von der Leyen’s commission postponed after three commissioner candidates rejected

The next European Commission is to begin its term in office later than expected as the November 1 coronation has been postponed so that three member states could offer new candidates to replace a trio rejected by the European Parliament.

Probing infections in Latvia, salmonella found in meat from Poland

As infection outbreaks in Latvia are under investigation, laboratory tests showed salmonella bacteria in Polish-origin poultry samples taken from SIA Gaļsaimnieks.

Germany to allow Huawei equipment on 5G networks

The Chinese tech giant Huawei will not be banned from the 5G mobile networks in Germany as Berlin stated it wants to create «a level playing field» for vendors.

OECD: Bribery prevention results in Latvia disproportionate to cross-border risks

Latvia’s results in fighting bribery are still disproportionate with the risks of cross-border bribery and money laundering the country is subjected to, says the Working Group on Bribery of the Organisation for Economic Co-operation and Development.

In pictures: Ukrainian President Zelenskiy in Latvia

Ukrainian President Volodymyr Zelenskiy and the Ukrainian first lady made an official visit to Latvia on Wednesday, October 16.

airBaltic not planning to cancel flights with Airbus A220

airBaltic does not plan to reduce its flights with the Airbus A220-300 plane, after Swiss International Air Lines decided to do this being concerned over the aircraft’s engine problems, according to a statement of the Latvian airline on social media.

PM Kariņš recommends spending confiscated EUR 29 mln as single investment

Latvian Prime Minister Krišjānis Kariņš has recommended the 29 million euros confiscated by the Riga Regional Court for being criminally-acquired to be spent on a one-off investment, according to an interview to LNT programme 900 sekundes.