Latvia set to approve oil prospecting license

RIGA - Latvia's Economy Ministry announced last week that its tender commission granted an offshore oil prospecting license to TGS Nopec, a U.S. based firm.

The commission's Feb. 26 decision will be passed to Economy Minister Aigars Kalvitis, who is expected to approve it later this week, according to Maija Vimba, head of the ministry's oil and gas department.

"This is a license for investigation and the commission approved it with some changes," she said.

Vimba said the changes regarded work safety issues and dispute settlements.

TGS Nopec was the sole bidder in a tender process that ended Oct. 31.

Latvia has opened up 17,000 square kilometers in its Baltic Sea territorial waters for crude oil prospecting.

The license will give TGS Nopec the right to conduct seismic surveys of the area but includes no production or drilling rights.

The license, which costs 2,000 lats ($3,125), is guaranteed for two years and is renewable for up to five years.

In addition to the prospecting area, Latvia has made 2,675 square kilometers available for drilling and production. It received no bidders for that tender, which was offered last fall.

Government geologists believe there is up to 50 million tons of crude in Latvia's territorial waters. But oil companies have shied away from operations because of disputes between Latvia and Lithuania over their shared sea border.

The U.S. company Amoco received an exploration license from the Latvian government in 1996 but refused to begin operations until Latvia and Lithuania resolved disagreements on the sea border.

Amoco pulled out of the license in 1998 after it merged with British Petroleum, but its Swedish partner Opab still holds rights to drill if Latvia ratifies the sea border agreement..

Lithuania's Parliament ratified the agreement in 1999, but it has foundered in the Latvian Parliament, mostly over disputed fishing grounds.