Latvia opens its gas market as it seizes control from Russia

By bne IntelliNews April 3, 2017

The Latvian gas market opened up to liberalisation on April 3 following entry into force of a number of legal changes. Riga has fought hard to end control of the gas transmission and storage infrastructure by Russia-controlled monopolist Latvijas Gaze (LG).

Latvia has now joined neighbours Lithuania and Estonia in wresting control of their gas grids from Russia. Any gas trader registered with the Latvian energy market regulator will now be able to supply gas via the grid. Until today, only Latvijas Gaze could use the grid, a situation which Riga has long seen as a threat to energy security, especially in the context of heightened tensions in the region.

Prompted by the European Union, which disallows common ownership of transmission and supply, Latvia is in the process of unbundling LG. Riga pushed the company to spin off an independent entity – Conexus Baltic Grid - to manage the country’s grid in December. The division of LG into trading and distribution companies is moving forward, although not without difficulty.

"From the open natural gas market, we expect competition between traders, a more diverse range of services and greater choice for all natural gas consumers,” Deputy Prime Minister and Minister of Economy Arvils Aseradens said in a statement.

“In parallel, we are working to create by 2020 the Baltic regional market in natural gas, which will give us greater security of supply and energy independence in the future," he added.

Opening of the market gives neighbouring Lithuania a chance to sell LNG it receives via a terminal opened in late 2015. Lithuania seeks to give the terminal a stronger business foundation; the project offers Vilnius considerable leverage over the region's dominant supplier Gazprom, but has been criticized as uneconomical.

The competition will be fierce, however. As many as 15 companies were registered with the Latvian regulator at the end of March as gas suppliers, The Baltic Times reports.

Most are Latvian companies: Latvijas Gaze, Latvenergo, Enefit, AJ Power Gas, ESK Sistemas, Euro Energo Company, Frenzo, GEG, Latvijas Propana Gaze, Rigas Gaze, Scener, Daugavpils Siltumtikli and WIN Baltic. Lithuanian companies Lietuvos Duju Tiekimas and Litgas complete the pack. 

 

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