Latvian government buys stake in gas operator Conexus, targets majority (updated)

Latvijas Gaze AS

19/12/2017 12:28

(Adds detail, background) 
    RIGA, Dec 19 (Reuters) - The Latvian government said on 
Tuesday it was buying an 18.31 percent stake in Conexus Baltic 
Grid, a gas transmission and storage operator, from German's 
Uniper Ruhrgas International GmbH  UN01.DE , a step towards its 
goal of securing a majority stake in the company. 
    Conexus operates the Incukalna underground natural gas 
storage, the largest in the Baltic States. 
    It was spun off from Latvian gas utility Latvijas Gaze 
 GZE1R.RI  at the end of the last year and is 34-percent owned 
by Russia's Gazprom  GAZP.MM . 
    The government's decision to buy comes eight months after 
Latvia became the last Baltic country to open its natural gas 
market for competition in line with European Union rules, ending 
a monopoly on supply held by Gazprom for decades. 
    The Latvian government said its ultimate aim was to obtain a 
majority in Conexus, part of its strategy of increasing Latvia's 
energy independence and reducing its reliance on Russia. 
    "Latvia is now ... on its way toward providing its energy 
independence," Economics Minister Arvils Aseradens told a news 
conference, saying that removing gas price gaps with other 
Central European countries were among the goals of the deal. 
    "The aim is setting up a common Baltic gas market and an 
active participation of the government of course envisages that 
the prime objective is to be a majority shareholder in the 
company," he added. 
    The pricing of the deal was not disclosed. 
    Conexus' owners also include European infrastructure fund 
Marguerite Gas with 29 percent of shares and gas trader Itera 
Latvija, a subsidiary of Russia's Rosneft  ROSN.MM , which holds 
a 16 percent stake. 
    Latvian energy regulations, which aim to secure the complete 
independence of the Conexus grid, require Itera Latvija and 
Gazprom to sell their shares by year-end. Failure to do so would 
see them lose their voting rights and face financial penalties. 
    Aseradens said the government was in an "active negotiating 
phase" regarding Gazprom's and Itera Latvija's stakes in 
Conexus. Under the new rules, the Marguerite Gas fund can remain 
a shareholder in the grid as it based in the EU. 
 
 (Reporting by Gederts Gelzis; editing by Niklas Pollard and 
Adrian Croft) 
 ((Gederts.Gelzis@thomsonreuters.com;)) 
 
Keywords: LATVIA GAS/