Latvia and Lithuania to Work on Developing a Gas Market

Latvia and Lithuania have agreed to work on developing a gas market, committing to provide participants with access to infrastructure, a memorandum signed on Friday showed.

 

Lithuania opened a liquefied natural gas (LNGLF) (LNG) import terminal in 2014 and started exporting natural gas to neighbouring Estonia earlier this year, breaking the supply monopoly of Russia's Gazprom.

 

"By signing the memorandum of understanding, both the countries commit to work together to encourage the entry of new gas suppliers in the market," Latvia's Economy Minister Dana Reizniece-Ozola said.

 

"It is important for Latvia to diversify its sources of natural gas supplies while working on liberalisation of the gas market of Latvia," she added.

 

The two countries haven't set a deadline for the market to be created, but said the agreement covered 2015-2017.

 

Latvian gas utility Latvijas Gaze, 34 percent owned by Gazprom, is the sole supplier in Latvia, and says it has a sales monopoly until April 2017 under a privatisation agreement signed in 2007.

 

The government has said it wants to split Latvijas Gaze, which also operates the Incukalns underground gas storage, one of the biggest in Europe, to boost competition.

 

Lithuanian Energy Minister Rokas Masiulis told Reuters in an interview on Wednesday his country was in talks with U.S. LNG company Cheniere Energy Inc over potential imports.

 

Lithuanian LNG importer Litgas has a five-year contract with Norway's Statoil (STO) to buy 540 million cubic metres of gas per year.

 

Masiulis said on Friday industrial buyers in Lithuania were paying 15 percent less than those in Latvia.

 

Latvijas Gaze said the price in Lithuania had fallen due to discounts provided by Gazprom, while gas from the terminal was more expensive.

 

Litgas has said it was selling gas imported via the LNG terminal at an average price of 29.4 euros per megawatt-hour (MWh) this year.

 

Latvenergo, Latvia's biggest power producer, has said it wanted to test gas imports from Lithuania in December, but still needs Latvijas Gaze to agree to transport it.

 

Latvijas Gaze has previously vowed to defend its monopoly, saying it could be penalized by Gazprom for taking less gas than agreed.


(Reporting by Gederts Gelzis; Editing by Nerijus Adomaitis and Mark Potter)