Latvian, Russian oil plans worry Lithuania

  • 2004-08-12
  • Staff and wire reports
VILNIUS-RIGA - Plans in Latvia to begin offshore oil exploration and Russia's ambition to build an oil terminal in the Kaliningrad exclave have caused serious concern in Lithuania, where officials fear any additional oil-related activity is likely to harm the nation's economic and environmental interests.

Lithuania's Foreign Ministry has asked the Environment Ministry and the geological service to investigate whether the Latvian project breaches the country's economic interests and what the impact it may have on the environment.
According to reports, Latvia's Economy Ministry has issued an exploration license to the Danish-registered Odin Energy for two areas in the Baltic Sea located approximately 15 - 18 kilometers from the Lithuanian border.
Should the exploration prove successful, Odin Energy, which is run by Thomas Haselton, a U.S. citizen and CEO of Minijos Nafta, a Lithuania-based oil producer, may launch extraction at a later date.
With oil prices at record highs, upstream projects - even more costly offshore ones - are extremely attractive to investors.
Maija Vimba, head of the oil and gas section of the energy department at Latvia's Economy Ministry, said that oil exploration would be located on the seabed.
If any spill were to occur, then currents would take the oil northward and not toward Lithuania, she was quoted as saying.
The Lietuvos Rytas daily reported that Lithuanian oil producers long ago raised the idea of exploring for oil in the Baltic Sea; however, authorities were unwilling to announce tenders for oil exploration in the sea shelf.
For this reason Lithuania has not announced any tenders for oil exploration on land for several years.
Meanwhile, Environment Ministry Undersecretary Aleksandras Spruogis said that that the government was unable to receive any information about Russia's plans for a new oil terminal in the Kaliningrad region due to the ongoing restructuring of the country's Natural Resources Ministry.
"All deputy ministers of natural resources have been fired, and the new deputy ministers still lack competence to address such matters," said Spruogis. "The officials we used to be in contact with are no longer there."
In his words, government officials have asked Russia to renew contacts on the issue but only received a response about the restructuring and promises to provide the requested information at a later date.
Despite the lack of information, Lithuanian officials believe the oil terminal might pose an ecological threat to the Baltic Sea, which is already at risk.
What's more, businessmen said a new oil terminal on the Baltic Sea would complicate the growing competition among oil handling companies.
Spruogis said he was still uncertain whether construction of the terminal had already begun in the seaside town of Yantarny, home of the largest amber deposits in the world, while media reports have claimed that it should be started before the end of this year.
Lukoil-Kaliningradmorneft, a subsidiary of Lukoil, Russia's second largest oil company, recently launched crude oil extraction at the D-6 deposit in the Baltic Sea, despite various protests.
D-6, also known as Kravcovskoye, was discovered in 1983 and is the largest oil deposit on the seabed close to the Kaliningrad region. The deposit is located just 23 kilometers from the Curonian Spit and merely five kilometers from the maritime border with Lithuania.
Preliminary information suggests about 600,000 tons of crude will be extracted there annually.
After studying the deposit's technical data at the end of November 2003, UNESCO experts found it as posing an ecologic threat to the National Park of the Curonian Spit, which is listed as UNESCO World Heritage.
In June, the UNESCO World Heritage Committee decided to list the spit as endangered on Feb. 1, 2005 if Lithuania and Russia failed to sign an agreement on an independent evaluation of the environmental effects, accident prevention, elimination of consequences and compensation of damages related to the D-6 project.