Latvia gas utility owners approve assets spin-off (updated)

Latvijas Gaze AS

02/09/2016 13:06

* Latvijas Gaze to be split in two parts 
    * New company to own gas storage, transportation 
    * Gas transportation tariffs seen rising-CEO 
    * Latvia to liberalize gas market from April 2017 
 
 (Adds Gazprom comments, CEO quotes, details) 
    By Gederts Gelzis 
    RIGA, Sept 2 (Reuters) - The owners of Latvia's gas utility 
Latvijas Gaze  GZE1R.RI  approved on Friday a spin-off of its 
gas transportation and storage assets, ahead of market 
liberalization next year, the company said at a shareholders' 
meeting. 
    Latvijas Gaze, 34 percent owned by Russia's Gazprom 
 GAZP.MM , imports and sells pipeline gas from Russia and 
operates the region's only underground gas storage. 
    Anton Belevitin, Gazprom's representative at the meeting, 
said the Russian supplier voted in favour, but it was "forced" 
to do so because of legal requirements. 
    Latvia's parliament amended the energy law in February, 
requiring the company to split, as EU rules do not allow gas 
suppliers and traders to control pipelines, and to open the gas 
market to competition from April 2017. urn:newsml:reuters.com:*:nFWN15Q025 
    Latvijas Gaze's other shareholders include EU's 
infrastructure fund Marguerite with a 28 percent stake, 
Germany's Uniper with 18 percent, and Latvian gas trader Itera 
Latvia with 16 percent. 
    Gazprom, Uniper and Itera would most likely be required to 
dispose their shares in the new company, Zane Kotane, Latvijas 
Gaze board member, said on Aug. 17. 
    Aigars Kalvitis, Latvijas Gaze's chief executive and the 
country's former prime minister, told Reuters he did not see the 
reorganisation posing a risk to gas supplies from Russia. 
    "Latvijas Gaze has a long-term supply agreement (with 
Gazprom) and we don't see such risks," Kalvitis said, adding 
that the agreement runs until 2030. 
    Belevitin declined to comment on Gazprom's plans after 
liberalization, saying he was not authorized to speak about it. 
    While gas prices for industrial users will be liberalized 
from April next year, households could buy gas under regulated 
prices until April 2019. 
    Gas companies from neighbouring Baltic states, Lithuania and 
Estonia, might be interested in selling gas in Latvia, when the 
market is open, Kotane has said. 
    Latvia's power producer Latvenergo has sought to import gas 
from neighbouring Lithuania, but plans were blocked by Latvijas 
Gaze. 
    Conexus Baltic Grid, a planned gas grid and storage company, 
is expected to start operations by around the end of this year, 
Kalvitis said. 
    Reorganisation would mean that gas transportation tariffs in 
Latvia will have to increase, because the new company will not 
be able to cover its costs with revenues from gas sales, he 
added. 
    Latvia consumed 1.3 billion cubic metres (bcm) of gas last 
year, while total consumption of the three Baltic states stood 
at 4.3 bcm in 2015. 
 
 (Writing by Nerijus Adomaitis, editing by William Hardy) 
 ((nerijus.adomaitis@thomsonreuters.com; +47 9027 6699; Reuters 
Messaging: nerijus.adomaitis.thomsonreuters@reuters.net)) 
 
Keywords: LATVIJAS GAZE RESTRUCTURING/