RIGA - Speaking July 5 in Moscow, Russia's Industry and Energy Minister Viktor Khristenko said that the country was interested in the electric utilities of both the Baltics and other countries.
Answering a question from a Baltic journalist about the plans of Unified Energy System, Russia's grid operator, to buy electric power facilities in Latvia, the minister said, "We will do as much as possible."
"These processes are related to the liberalization of the electricity market. The liberalization must take place not only in Russia but also along the Russian border so that the market would encompass neighboring countries where costs are not high," Khristenko said.
According to the minister, Russia was also working actively with the European Union on the synchronization of its energy systems with Europe.
"We are synchronizing technical standards, maintaining the safety level within the systems," he said, adding that a joint task force had been set up to prepare documentation over the next two years for energy system synchronization in Russia, the CIS and Europe.
UES started foreign market investing during the summer of 2003. It has bought energy companies in Georgia and Armenia, started negotiations about participation in Ukrainian companies, bid for privatization of the Slovak energy company Slovenske Elektrarne and planned several projects in the Baltics.
UESR board member Leonid Gozman earlier this year told the Diena daily that the Russian energy monopolist regarded the Baltic states as being within a sphere of interest and would consider bidding for the privatization of power facilities in Latvia, if any such sell-off is announced.
Meanwhile, Khristenko dashed Latvia's hopes that deliveries of crude oil via the Ventspils pipeline would soon begin again, saying that Russia was primarily interested in using its own ports and that any renewal of transit through Latvia would require unjustified expenditures.
"Russia, as a large exporter, is interested in developing its own ports," said the minister, adding that its northwestern export routes were focused on Primorsk, where handling capacity is approximately 42 million tons per year and expected to grow to 62 million tons by next year.
"It would be hard to deny logic and not use our own possibilities," said Khristenko.
Besides, he said, transit through Latvia has not been halted altogether, as oil is delivered to Ventspils by rail and oil products by pipeline.
Russia began reducing crude oil exported to Ventspils in 2002, stating that tariffs were too high, even though many Russian oil companies were eager to continue doing business with Ventspils. Starting Jan. 1, 2003, it cut off supplies completely.
Latvian officials, both public and private, maintain that the decision was political, while Russian government officials claim it was economics that guided the move. Still, in early 2003, when the Gulf of Finland froze and deliveries through Primorsk came to a standstill, four leading crude exporters in Russia appealed to the Kremlin to open the pipeline to Ventspils as a way of defusing the bottlenecks in the country's pipeline system.
Last week a Russian Foreign Ministry official hinted that the country was still interested in a majority stake in Ventspils Nafta, the operator of the Latvian port.
As Alexander Udaltsov, head of the ministry's second European department, told Baltic journalists last week, "If Ventspils wanted crude oil, they could have had it a long time ago. We only need a controlling stake. But if we are not given it, then why should we pump oil through Ventspils?"
He said that Russia had good opportunities for exporting oil through other ports without Ventspils, once the biggest exporter of Russian crude oil on the Baltic Sea.
The chance of Latvia regaining crude oil pipeline supplies from Russia is decreasing with every day, said the official.
"For a long time Ventspils was in a way a monopoly and used the position in regards to tariffs. I warned [Ventspils Mayor Aivars] Lembergs that we would seek alternatives, but he did not believe me. Now we have done so," said Udaltsov.
Latvia has tried pressuring Russia on the issue through international organizations but with little luck. Khristenko said that Russia was holding its dialogues with the European Union.
"The EU is sensitive toward the Baltic region, but I must say that this is not related to the development of transit but to ecology problems in the Baltics. I can say that there is no port ecologically safer than Primorsk, because it is a new port," said the minister.
