Latvijas Gaze predicts banning gas supplies from Russia will cause energy crisis
RIGA. April 7 (Interfax/BNS) - Banning supplies of Russian gas to Latvia will cause an energy crisis and lead to higher prices for the consumer, Aigars Kalvitis, chairman of the Latvijas Gaze management board, said in a statement.
The amendments to the energy law that have been submitted to the Saeima, Latvia's parliament, envisaging a ban on the supply of gas from Russia to Latvia practically force Latvijas Gaze to purchase gas reserves at record high prices and store them in the Incukalns underground gas storage facility, Kalvitis said.
Government subsidies to support private households, which the government began providing at the beginning of the year when prices were much lower, will have to be talked about, seeing as rates will be significantly higher, he said.
This issue needs to be considered from a regional standpoint, Kalvitis said. Latvia alone cannot ban imports in a single market zone; Finland and Estonia should also do it, he said.
"In essence, this is an intergovernmental matter where a political decision can be made in agreement with three market players. At present, both Finland and Estonia have taken a position of wait and see, awaiting the European Commission's decision on the future of the gas market. Making a decision is being drawn out. It would seem, taking into account the complex nature of the issue, that more time is needed for this," Kalvitis said.
Latvijas Gaze does not at the moment have at its disposal the Economics Ministry's specific plan to possibly refuse Russian gas, and the company cannot, therefore, comment on how this might take place, he said.
"We still have winter ahead of us, there are no alternative sources of supplies for the summer at the moment, and we need to take care of more than 350,000 customers. Therefore, Latvijas Gaze is thinking about how to purchase gas, including from Russia, on the condition that this will be allowed," Kalvitis said.
The company can support the market in its current state until July 2022 with the current gas reserves. According to Kalvitis, he expects a professional discussion, specific plans to be laid out by the Economics Ministry, and level-headed political decisions.
The parliament's economic commission approved a proposal to amend the energy law with a ban on supplies of natural gas from Russia to Latvia on April 6. Representatives of Latvijas Gaze at the meeting did not object.
The company's turnover in 2021, according to preliminary information, was 583.342 million euros, and its net profit was 3.2 million euros. Gazprom is the company's largest shareholder with a stake of 34%, followed by Marguerite Gas II.S.a.r.l. at 28.97%, Uniper Ruhrgas International GmbH at 18.26%, and Itera Latvija at 16%.