Political parties forming the government have conceptually agreed to initiate construction of a liquefied gas terminal (LNG) in Latvia, Prime Minister Krisjanis Karins has said at a press conference after a meeting of coalition parties.
The PM said the Ministry of Economics was ordered to work with potential investors to assess who would build the terminal and where. Karins said this was a medium-term project.
In a short-term perspective the Ministry of Economics will continue talks with Estonia and Finland to ensure natural gas supplies from Paldisku LNG terminal, which is under construction in Estonia and should be finished this year.
Supplies of liquefied natural gas from Klaipeda LNG will continue, added Karins.
Ministry of Economics Janis Vitenbergs said talks with private investors were already underway and those entrepreneurs said that Latvia’s LNG terminal could commence operations in 2023-2024.
Vitenbergs stressed that in talks with investors the ministry stuck to the position that the project needed to be implemented in commercial terms and the involvement of the state needed to be as low as possible.
The minister affirmed that Skulte and Riga might be picked as potential locations for the new LNG. The investors that did not participate in the talks mentioned these two locations might be the most appropriate.
At the same time, Vitenbergs admitted that entrepreneurs would like to see guarantees from the side of the state, such as guaranteed amount of procured liquefied gas, or a specific threshold until which the state would help cover the terminal’s operational costs.
Entrepreneurs would also like to see guarantees that Latvia would purchase liquefied gas, not return to buying Russian natural gas at some point.
Vitenbergs stressed that the amendments that were in the works to the Energy Law, which provided for prohibiting procurement of Russian natural gas, would provide such guarantees.
The minister of economics said during his visit to the US he had talks with big LNG players about gas supplies to Latvia. Six LNG enterprises expressed an interest in Latvia’s market. Vitenbergs said Latvenergo would evaluate offers, pick the best and then sign a contract.
When asked about the potential load for Latvia’s new LNG, because it might become the third such terminal in the Baltic States and Klaipeda LNG and Paldisku LNG would be enough to satisfy consumption in the Baltic region, Vitenbergs stressed Latvia’s advantage was the ability to secure a full infrastructure cycle using Incukalns underground gas storage facility.
“Thanks to such advantages, we will be able to make our decision independently of our neighbours. It is possible we will be able to invite neighbours to participate in Latvia’s terminal project,” said Vitenbergs.
Prime Minister Krisjanis Karins said having Incukalns gas storage facility meant the terminal in Latvia could be the cheapest and most economical in Baltic States in a medium-term perspective. The PM said both Klaipeda terminal and Paldisku terminal were floating regasification facilities and they had higher operational costs and a limited processing capacity.
The advantage of Latvia’s terminal would be in the form of not having to store gas at the terminal – gas will be stored in Incukalns, said the PM.
Vitenbergs also said the coalition conceptually agreed to cease imports of Russian natural gas from January 1, 2023 onward. This year Latvia will see a gradual stop of imports. Next year was picked to give time for Latvia to coordinate activities with Estonia and Finland and avoid the possibility of Russian gas being sold in Latvia by Estonian or Finnish entrepreneurs.
When asked if Latvia’s stores of natural gas were sufficient, Vitenbergs explained the filling of Incukalns gas storage facility commenced a couple of months sooner than usual, adding that in April and May Klaipeda LNG would receive two tanker ships carrying 2 TWh of gas for Latvenergo.
Vitenbergs explained that this spring Incukalns storage facility also had greater reserves, which meant there was 7.5 TWh of gas stored there currently.
With 2 TWh of gas procured by Latvenergo, reserves should hold.
Vitenbergs explained that clarity about entrepreneurs and who wiould be contracted to build Latvia’s LNG should come in the next two weeks.
The minister of economics added that the ministry would continue moving towards reducing dependence on fossil fuels.
Minister of Welfare Gatis Eglitis said in the next two weeks there would be a meeting with two or three potential investors. The decision who would be picked to “move forward on this path” should be made in the next two weeks, said Eglitis. (BNN/Business World Magazine)
