Energy, Gas, Gas Market , Latvia

l date is December 31, 2017, and two important processes have to be completed by this date – restructuring of Latvijas Gaze, separating natural gas transmission assets from it, and Conexus Baltic Grid gas transmission and storage company should have different owners. If the first process is an internal issue of Latvijas Gaze shareholders, then the result of the second process will directly affect competitiveness of the Latvian natural gas market in the future," said Pinkulis.

In his words, the current shareholders and potential shareholders in Conexus Baltic Grid have little time to agree on the transactions, considering the size and complexity of the deal.

"Considering the amount of work that has to be done by December 31, it is clear that this will be a tense year for the current and future market players," said Pinkulis.

As reported, the amendments to the Energy Law providing for the opening of Latvia’s gas market took effect on April 3.

Legal entities will have to pick a new natural gas supplier by June 15, 2017, but households will not be required to choose a new gas supplier or to pay the market price for natural gas. The households which elected to keep buying gas from the existing supplier, Latvijas Gaze natural gas utility, would receive gas at a regulated price determined by the regulator until 2019.

The Latvian parliament in February 2016 passed amendments to the Energy Law in the final reading to support liberalization of the gas market and the rules on unbundling Latvijas Gaze natural gas utility. Under the amendments, Latvijas Gaze has to be split up in two companies - one for operating the gas transmission and storage system and the other for dealing with natural gas distribution and sale - by April 3, 2017, and the former has to be separated from Latvijas Gaze by December 31, 2017.

Conexus Baltic Grid that will take over natural gas storage and transmission functions from Latvijas Gaze was established on December 22, 2016. Its largest shareholders are Russian Gazprom (34.1%) Marguerite Fund (29.1%), Germany's Uniper Ruhrgas International GmbH (18.3%) and Itera Latvija (16%) or the same as Latvijas Gaze shareholders. But the shareholders, with the exception of financial investor Marguerite Fund, have to dispose of their shares in Conexus Baltic Grid by the end of 2017 so that the new shareholders would not be related to Latvijas Gaze.