Baltic States – CIS, Energy, EU – Baltic States, Gas, Gas Market , Latvia, Lithuania, Markets and Companies

In April, Latvia will complete the implementation of the requirements of the European Union's (EU) Third Energy Package for the gas market, i.e., it will separate gas supplies from gas transmission and open up the gas market of over 1 billion cubic meters. Furthermore, this will scrap the monopoly of Latvijas Gaze, which has been preventing Lithuanian companies from selling gas to Latvian consumers in past years.

Lithuania's energy holding Lietuvos Energija has been for some time intending to sell gas in Latvia, however, the attempts were thwarted by the monopoly contract of Latvijas Gaze, which prevented gas supplies to the neighboring country's clients. Latvenergo's board member Maris Kunickis has recently said that Lithuania had last year offered gas at a lower price than that by Latvijas Gaze.

Dominykas Tuckus, board member at Lietuvos Energija, says that the group intends to also offer a lower price to Latvian clients this year, however, did not elaborate on the price difference.

"We are looking at an aggregate portfolio whether we can be competitive, so we see we can," Tuckus told. In his words, first gas sales in Latvia are expected as early as this summer.

Latvian companies can take interest in the possibility of buying gas via the liquefied natural gas (LNG) terminal, said Tuckus, adding that Lietuvos Energija feels it has an advantage, as it has experience in purchasing freight.

After separating its gas supplies and transmission operations, the Russian gas concern owns 34.1% of shares in Latvijas Gaze and Conexus Baltic Grid each. Sources within Gazprom have told that the company intended to sell its stake in Conexus Baltic Grid, with a decision yet to be made on Latvijas Gaze.

Latvian energy expert Reinis Aboltins says that even if Gazprom kept its Latvijas Gaze holding, it would not cause any problems. In his opinion, Gazprom will not be able to influence the market until it holds a stake in Conexus Baltic Grid.

"And it's up to the regulator and the competition authority to take care of fair play. Otherwise, if we say that's only because of Gazprom we are liberalizing the gas market, it's not only about Gazprom, it's about having a liquid dynamic gas market regardless of who is the owner of any of the companies. If we deny this sort of approach, we don't need EU legislation, it can do nothing for us," Aboltins told.

The Latvian expert also expressed hope that Gazprom leaves Latvijas Gaze, and the latter fails to agree on gas with the Russian gas concern, causing the current monopoly to disappear from the Latvian market in the long run.

Tuckus also does not fear Gazprom's influence in Latvia. In his words, if the Russian concerns offers exclusive conditions to Latvijas Gaze, the move would draw attention of European institutions.