Latvijas Gaze warns ban on Russian gas would result in energy crisis in Latvia

  • 2022-04-07
  • LETA/TBT Staff

RIGA - A ban on Russian gas imports would result in an energy crisis and higher prices for customers, Aigars Kalvitis, CEO of Latvijas Gaze natural gas utility, warns in statement to Nasdaq Riga. 

Kalvitis says in the statement that the draft amendments to the Energy Law, which are currently being pushed through parliament, would effectively force Latvijas Gaze to procure gas reserves at a record high price for keeping at the underground gas storage facility in Incukalns. 

The Latvijas Gaze CEO indicates that in this context it would necessary to consider subsidies to households, which the government had already started to provide at a time when the gas price was still lower. "When the conditions set out in the amendments to the Law come into effect, the tariff applicable to households will be substantially higher. Even assuming that a change of public trader is possible, customers will still be allowed to choose their supplier," Kalvitis said.

He also urges to look at the issue from the regional perspective, noting that Latvia cannot single-handedly ban gas import in the common market area, as both Finland and Estonia would need to do so as well. 

"It is essentially an intergovernmental matter where a political decision is made upon agreement among three market participants. Finland and Estonia, too, have taken a wait-and-see stance, waiting for the European Commission’s decision on the future perspective of the gas market. The decision is delayed. Apparently, it needs more time due to the complex nature of the matter," Kalvitis argues in the statement to the stock exchange. 

Latvijas Gaze does not yet have a concrete plan from the Ministry of Economy, so the company cannot comment on how the proposed ban on Russian gas might be implemented. 

"There is a winter ahead of us, there are no alternative supply sources in the summer, and we need to take care of a portfolio of more than 350,000 customers, which is why the JSC Latvijas Gaze is thinking how to buy gas, including from Russia on condition that this is allowed," Kalvitis says. 

With the available reserves, we can keep the market in its current state till July 2022, the Latvijas Gaze CEO informs. 

As reported, the Saeima's Economic, Agriculture, Environmental and Regional Policy Committee on Wednesday endorsed a proposal to impose a ban on natural gas supplies from Russia to Latvia. 

Prior to the meeting, Kalvitis sent his objections to the draft amendments to the Energy Law. Kalvitis objected to the decision to ban natural gas supplies from from Russia. In the letter, the Latvijas Gaze CEO draws lawmakers' attention the fact that the supply of energy, including natural gas, is a set of legal and technical activities in which changes require time and resources.