Latvia says plans to split gas monopoly in 2017

Latvijas Gaze AS

15/09/2015 18:08

By Gederts Gelzis 
    RIGA, Sept 15 (Reuters) - Latvia's government finalised on 
Tuesday a plan to split its natural gas monopoly Latvijas Gaze 
 GZE1R.RI  to boost competition, in line with European Union 
rules, and said it would be completed in 2017. 
    The plan sets the Baltic states on a collision course with 
its sole gas supplier, Russia's Gazprom  GAZP.MM , which has a 
34 percent stake in Latvijas Gaze, a gas sales, transportation 
and storage business. 
    Germany's E.ON  EONGn.DE  is seeking to sell its 47.2 
percent stake in Latvijas Gaze, but the sale process has been 
stalled by uncertainty about the Latvian utility's 
future. ID:nL5N0VS2YU  
    "Splitting of Latvijas Gaze has to be finished by the end of 
2017," Latvia's Prime Minister Laimdota Straujuma was quoted as 
saying by news agency LETA.  
    She spoke after the cabinet approved amendments to Latvia's 
Energy Law requiring the gas monopoly to set up a separate 
independent company to operate the country's main gas pipeline 
and underground gas storage until April 3, 2017. 
    By the end of 2017, ownership of the gas transport and 
storage business will have to be separate from gas sales. 
    The amendments have to be approved by parliament. 
    Latvia's Baltic neighbours Lithuania and Estonia have 
carried out similar reforms recently, forcing Gazprom to exit 
gas transportation business in those countries. 
    EU rules require member countries to separate control of gas 
transportation and supply to ensure competition. 
    Latvia's energy regulator, the Public Utilities Commission, 
approved last week rules for third-party access to the country's 
gas infrastructure, including underground gas storage. 
    The rules require Latvijas Gaze to disclose information 
about available spare capacity, which could be used by other 
participants to transport or store gas. 
    The regulator has said the rules should allow Latvian 
consumers to look for alternative supplies. 
    "This is the most significant development towards a real 
(gas) market," Reinis Aboltins, an analyst at Riga-based think 
tank Providus, told Reuters. 
    The European Commission called on Latvia last year to 
approve the rules to increase its energy security. 
    Latvijas Gaze, however, said the rules contradicted the 
Energy Law and violated shareholders rights, as a privatisation 
agreement from 1997 gave the utility exclusive rights to sell 
and transport gas in Latvia until April 3, 2017.  
    The company was considering its options, which do not 
exclude disputing the rules in court, Vinsents Makaris, a 
spokesman for Latvijas Gaze, told Reuters in an email. 
    The government has previously dismissed Latvijas Gaze 
threats to challenge the monopoly's breakup. ID:nL6N0WW4NK  
    While it remains unclear how the rules will work in 
practise, Latvia's biggest gas consumer, state-owned power group 
Latvenergo, said it was considering importing gas from 
neighbouring Lithuania, which opened a liquefied natural gas 
(LNG) terminal last year. 
    Lithuanian LNG importer Litgas told Reuters it had been 
holding discussions with potential clients in Latvia, but 
declined to elaborate. 
 
 (Additional reporting by Andrius Sytas in Vilnius, writing by 
Nerijus Adomaitis; Editing by Susan Fenton) 
 ((nerijus.adomaitis@thomsonreuters.com; +47 9027 6699; Reuters 
Messaging: nerijus.adomaitis.thomsonreuters@reuters.net)) 
 
Keywords: LATVIA GAS/