Latvian gas utility to set up new transmission and storage firm (updated)

Latvijas Gaze AS

22/12/2016 11:02

* New company to operate the region's only gas storage 
    * Gazprom, Uniper expected to sell stakes in new operator 
    * Latvia government to decide in Jan whether to buy stakes 
 
 (Adds officials, detail, background) 
    By Gederts Gelzis 
    RIGA, Dec 22 (Reuters) - Shareholders in Latvian gas utility 
Latvijas Gaze  GZE1R.RI   voted on Thursday to set up a new 
company, Conexus Baltic Grid, to operate the Baltic state's main 
gas pipelines and the region's only underground gas storage. 
    The move is aimed at meeting European Union rules on 
separating gas sales from gas supplies and comes ahead of a 
market liberalisation in April that will end the monopoly on 
supply in Latvia held by Russia's Gazprom  GAZP.MM  for decades. 
    Gazprom, which is the biggest shareholder of Latvijas Gaze 
with 34 percent, will have a stake of the same size in Conexus 
but is expected to sell this by the end of 2017, Latvian 
officials said. 
    The Russian firm has already exited gas utilities in the 
other two Baltic states, Lithuania and Estonia, following a 
liberalisation of gas markets there. 
    The EU is striving to reduce the reliance on Russian gas 
across its 28-member states to improve security of supply. 
    Germany's Uniper  UN01.DE  and Latvia's gas trader Itera 
Latvija are also expected to sell their 18.26 percent and 16 
percent stakes in Conexus, respectively. 
    Latvia's Economy Minister Arvils Aseradens said on Dec. 8 a 
number of European gas grid operators and infrastructure 
investors had shown an interest in buying into Conexus. 
    He previously named Germany's Open Grid Europe (OGE), 
formerly the gas transportation arm of Germany's E.ON, as one 
potential buyer.  urn:newsml:reuters.com:*:nL8N1C559I 
    The Latvian government will decide in January whether it 
should use its right of first refusal to acquire shares itself, 
officials said. 
    European infrastructure fund Marguerite is expected to keep 
its 28.97 percent stake in Conexus.  urn:newsml:reuters.com:*:nL8N1C559I  
    The three Baltic states aim to create a joint gas market by 
around 2020, with new gas links to Finland and Poland. 
    Latvia's 2.3 billion cubic metres underground gas storage, 
Incukalns, is seen as key for such a market to emerge as it can 
help balance cross-border flows.          
 
 (Writing by Nerijus Adomaitis; Editing by David Clarke and Mark 
Potter) 
 ((nerijus.adomaitis@thomsonreuters.com; +47 9027 6699; Reuters 
Messaging: nerijus.adomaitis.thomsonreuters@reuters.net)) 
 
Keywords: LATVIJAS GAZE RESTRUCTURING/