Latvia Drops Bid to Buy E.ON's Gas Utility Stake

Latvia's government has abandoned talks to buy a 47.2 percent stake in Latvian gas utility Latvijas Gaze from Germany's E.ON, the country's prime minister said in a television interview on Tuesday.

Latvia submitted a non-binding offer to buy shares from the German utility in September, after E.ON sold its stakes in gas utilities in neighbouring Lithuania and Estonia this year.

Prime Minister Laimdota Straujuma told the public broadcaster the price was too high.

"We cannot continue talking about this process further," Straujuma said. "The price (asked by E.ON) is what we cannot offer."

Straujuma told Reuters in June E.ON wanted to sell its stake for 220 million euros ($278 million).

Latvia's TV3 television reported on Sunday that the government had offered to pay 116 million euros for E.ON's stake in the utility, which is also 34 percent owned by Russia's Gazprom and 16 percent by gas trader Itera Latvija.

The country's economy ministry declined to comment on the reported price and the negotiations with E.ON.

E.ON's stake in Latvijas Gaze is worth around 175 million euros ($223.28 million) at current market prices, according to Reuters calculations.

TV3 also reported that infrastructure investment fund Marguerite, owned by European development banks, and the oil trader Vitol, were interested in E.ON's stake.

Vitol, which owns 49.98 percent of Latvian oil terminal company Ventspils Nafta, opened an office recently in Riga, and said Latvia's capital will become its regional trade centre.

Two Lithuanian state-owned energy firm, Lietuvos Energija and EPSO-G, have also submitted non-binding offers to E.ON.

(1 US dollar = 0.7838 euro)

(Reporting by Aija Braslina, editing by Nerijus Adomaitis and Susan Thomas)