Latvia's oil handlers mysteriously sanguine

  • 2004-08-19
  • Baltic News Service
RIGA - Recent statements indicate that managers of Latvia's oil transit firms - Ventspils Nafta and pipeline operator LatRosTrans - are prepared to cut a deal in order to renew crude oil deliveries. What's more, they reportedly have two plans to ensure that it will happen.

Vladimirs Solomatins, vice-president of Latvijas Naftas Tranzits, the core shareholder of Ventspils Nafta, told the Dienas Bizness daily that managers were prepared to "take any chance" they could "to renew crude oil supplies via pipeline."
"It all depends on the price and terms," he said.
Solomatins stressed that renewing pipeline supplies, cut off in the beginning of 2003, must be accomplished soon and that selling the terminal was an option. Otherwise, he said, staff would have to be cut and assets frozen.
"We are open to negotiations. Only the Russian side has to be interested now," he said.
The words confirm a financial statement issued by Ventspils Nafta last week that claimed negotiations were under way with various parties to restore the oil flow.
"Considering also the latest trends in the world's oil market development, Ventspils Nafta and LatRosTrans management and councils believe the present situation is temporary and that oil transportation will resume in the near future," the statement read.
Still, similar things have been said in the past, and it was unclear what managers thought was the basis for hope at a time when Russian officials have been increasingly intransigent about the idea of renewing deliveries to Latvia.
Russia began reducing oil supplies to Ventspils via pipeline in 2002, and by 2003 they dried up completely. Ventspils Nafta management has tried to compensate by boosting rail deliveries, which are considerably more expensive. Total investments related to oil transportation amounted to some 16 million lats (24 million euros) in Ventspils last year, according to the statement.
Still, Russia's Energy Minister Viktor Khristenko said earlier this summer that even if Russia wanted to resume oil transit via Latvia by pipe, it would be unfeasible since the infrastructure required massive investments.
A Russian Foreign Ministry official said that Russia wanted a controlling stake in the Ventspils terminal before offering new supplies. "Ventspils could have long since got the oil if it wanted. We only need the controlling stake, but why should we pump oil via Ventspils if we are not given it?" the official asked.
Oil handling operations are carried out by Ventspils Naftas Terminalis, a Ventspils Nafta subsidiary formed last year to facilitate the possible sale of the asset. Latvia has voiced its concerns regarding the oil transit to the European Commission so Latvia's interests are ensured in talks with Russia on its accession to the World Trade Organization.
Ventspils Nafta also is a co-owner of LatRosTrans, in which the Russian co-owner, Transnefteprodukt, holds 34 percent.
Ventspils Nafta's largest shareholders are Latvian state and Latvijas Naftas Tranzits.