Latvian parliament approves gas market liberalization

By bne IntelliNews March 14, 2014

bne -

The Latvian parliament on March 13 approved in the final reading amendments to the Energy Law, which will see the country's gas market gradually liberalized over the next three years.

According to the amendments, the liberalization of the gas market will take place in several stages, reports Leta. The process will kick off on April 4, and run until April 3, 2017 - the expiry date of the terms of privatization of Latvijas Gaze, at which point the national gas company will complete unbundling.

According to a press statement issued by Latvijas Gaze, "the terms of privatization ensured the integrity and market exclusivity for 20 years since its privatization in 1997."

The company provides a schedule for the unbundling of the Latvian gas industry, which is the key demand of the EU's Third Energy Package, and has also been utilised next door in Lithuania during its bid to reduce reliance on Russian gas.

Riga faces a similar ownership structure at Latvijas Gaze as Vilnius does at its national gas company Lietuvos dujos, with ownership in the hands of Russian state giant Gazprom, Germany's E.ON and Russian gas supplier Itera. However, Latvia has been far more wary of confronting Moscow in its bid to break Russia's 100% dominance of the market, and stressed as it launched the plan in 2012 that it would closely consult with Gazprom.

Speaking after the second reading of the bill in February, Janis Ozolins, who heads the parliamentary committee responsible, noted to Leta that the precise conditions of the unbundling would be discussed ahead of the final reading to avoid the risk of any lawsuit regarding violation the original Latvijas Gaze privatization agreement.

Yet it is still required by Brussels - which has boosted its own efforts to push back Russia - to break up the assets. Third-party access to Latvia's distribution, transmission, liquified natural gas (LNG) systems and gas storage facilities will be opened on April 4. Meanwhile, as the major supplier on the market, Latvijas Gaze will have until the cut off date in 2017 to sell off the distribution and transmission operators.

The same date is set for consumers to have the right to choose their supplier, unless the gas network is plugged into European systems outside the Baltics and Finland, in which case the date could be brought forward. The link up within the region is ongoing under plans to develop shared LNG facilities.

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