Baltic States – CIS, Energy, EU – Baltic States, Gas, Latvia, Legislation

According to Straujuma, it is technically impossible to secure alternative gas supplies and therefore end Russia's gas monopoly until 2017, when gradual liberalization of the gas market is to begin in Latvia.

During the visit in the United States last week, Straujuma saw that the U.S. companies are interested in supplying gas to Europe, including Latvia, however, two to three years are required in order to organize U.S. gas supplies, which corresponds with the expected gas market liberalization in Latvia.

Straujuma stressed that the dependence on the Russian gas is not only Latvia's problem, it is an urgent matter for the other Baltic States, Poland and Finland as well. For this reason, the government has to make a decision in the coming month on how to terminate Russia's gas monopoly.

According to Straujuma, there are several opportunities – a gas pipeline through Poland and Lithuania, connecting Latvia with Western Europe, establishment of a regional gas terminal, which the Baltic countries have still not agreed upon, and construction of a local terminal in Latvia.

Straujuma believes that when talking about a regional gas terminal, it does not matter where it would be located, agreement must be reached on mutual interests and costs. Latvia believes that the most suitable location for the terminal would be Latvia, though latest developments indicate that the terminal could be built in Finland. In this case, building a reverse gas pipeline would have to be considered.

The government will be considering the possibility of purchasing 47.23% of Latvijas Gaze shares from the German company EO.N Ruhrgas for two to three months, said Laimdota Straujuma.

Straujuma indicated that the government had to reply to EO.N Ruhrgas about the potential shares acquisition until May 2. The Cabinet of Ministers made a decision to continue the negotiations with the company and carry out an in-depth analysis, evaluating the price and other conditions of the possible transaction, for example, the veto rights for shareholders who own less than 50% of the shares.

According to Straujuma, no deadlines have been set in this matter. The evaluation could be accomplished in two to three months. After that, the government will decide on further action.

As reported, the German company is planning to sell its stake in Latvijas Gaze and to withdraw from the Baltic market altogether. Last year, the government theoretically considered the possible strategies in case EO.N Ruhrgas decides to sell their Latvijas Gaze shares.

The cost of Latvijas Gaze shares is estimated to be EUR 600 million.

In 2013, Latvijas Gaze earned EUR 32.2 million in profit, which is 1.3% less than in 2012 (EUR 32.6 million).

At the moment, EO.N Ruhrgas owns 47.2% of Latvijas Gaze shares, Russia's Gazprom has a 34% stake and Itera Latvija 16%.