Riga eyes Latvian gas grid

By bne IntelliNews March 16, 2016

Latvia could partner with EU-backed investment fund Marguerite to buy the country's gas transmission and storage assets from Latvijas Gaze (LG), as the deadline for unbundling the monopolist approaches, a government official said on March 15.

Latvia has ruled LG must be split up into seperate sales and transmission units – as required by the EU energy law – by April next year. The Russian controlled company is trying to stave off the move, which comes as its 20-year monopoly in Latvia - granted during the privatisation process - comes to an end.

With the Latvian government having failed in a bid to buy into LG in 2014, Marguerite acquired a close to 30% from Uniper Ruhrgas International (former E.ON) in late January, in a deal clearly meant to support Riga and pressure the company to conform to EU regulations. Other key stakeholders are Russian gas giant Gazprom, which holds 34%, Russian-controlled Itera Latvija with 16%, and Uniper Ruhrgas with 18.26%.

Once unbundling is completed – a process still opposed by Latvia's powerful gas lobby – Riga could buy the transmission and storage entity carved out of LG. Marguerite would be one of the state’s partners, Economy Minister Arvils Aseradens told Latvian Television.

Until that time, however, LG is fighting hard to keep its monopolist position intact, and block development of a unified Baltic region gas market. The Latvian infrastructure is key to efforts to reduce reliance on Russian gas, not least because it hosts the region's only storage facility at Inculkalns. Gazprom supplied all gas in the region until Lithuania launched an LNG facility at the start of last year. 

LG was reported on March 15 to have blocked a trial gas shipment from Lithuania, despite the Latvian parliament having passed legislation opening the way for third party access to the gas grid. The Latvian gas company insists no other party can use the infrastructure until April 2017.

Meanwhile, LG is still pushing to delay unbundling to 2019. Lithuania's LNG platform is struggling commercially, and needs to expand its customer base in order to relieve pressure on the government over the fees it is charging major companies to support the facility.



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