RIGA - Now that market prices are at 20-year highs, several foreign investors have shown serious interest in oil exploration and extraction in Latvia's coastal region, a government official said last week.
Though she couldn't name the investors, Maija Vimba of the Economy Ministry said that one of the companies was from the United States and would arrive this week in Riga to speak about oil extraction possibilities in Latvia's territorial waters. She stressed that growing oil prices - and the belief that they will stay on current levels on the back of Asian demand - could possibly trigger investor interest.
"Investors are ready to invest in oil extraction even in our geological situation," she said.
However, Vimba predicted that none of the investors was ready to make a final decision due to the large investments needed to extract oil from the bottom of the sea. "This is a very expensive business. The investors will first come, look, think and only then make a final decision," she said.
Early in July Economy Minister Juris Lujans issued Odin Energi two oil exploration and extraction licenses covering two fields in Latvia's waters. Several other fields, meanwhile, remain available for exploration.
Apart from oil deposits at sea, there is also interest in land-based extraction.
Businessman Kristaps Rum-nieks has applied for a field license in Dunalka county in western Latvia on an area that covers 2.08 hectares. This plot is near another 162.3-hectare area that has been identified as an oil exploration and production license field.
U.S. citizen Otis Armstrong has also asked the ministry to license a field spanning one hectare in western Latvia. Armstrong has rented the plot located near the 100-hectare field in Gudenieki county - the only serious potential oil extraction site in Latvia - for 99-years.
The Economy Ministry said the government was to decide on licensing of the fields in the near future.
Although specialists believe that the most promising oil deposits are in the Gudenieki region, licensing has not yet been set as rights to the land remain unclear.
Oil was found in Latvia as long ago as the 1960s, but no industrial production was launched because the field lacked the necessary economy of scale. However, in the past three decades oil extraction techniques have advanced and nowadays even small deposits can be utilized.
In 1996 the Economy Ministry issued a license for sea-based upstream oil activity to Amoco and OPAB, but exploration never began due to Latvia and Lithuania's failure to sign a maritime border agreement.