Lithuania mulling over gas storage in Latvia

  • 2005-09-14
  • From wire reports
VILNIUS - Prime Minister Algirdas Brazauskas said Lithuania was considering arranging underground natural-gas storage on Latvian territory and may arrange financing from funds earmarked for the decommissioning of the Ignalina Nuclear Power Plant.
"The new project is feasible 's the facility could be arranged on Latvia's territory since we have no geographical locations suitable for this purpose," Prime Minister Algirdas Brazauskas said in an interview with the Ziniu Radijas radio station. "The construction of this facility is in our plans."

He added that Lithuania could use funds assigned for the closure of the atomic plant in Ignalina to finance construction.

Currently Lithuania does not possess its own natural-gas storage that it could use in case of emergency. Theoretically, it could use a 2-billion cubic meter gas storage site in Latvia via the newly established gas link between the two countries.

Previously, the government considered gas storage alternatives at several locations in western Lithuania. One recent study for a prospective storage site was suspended due to lack of funding.

An underground storage site would cost some 518 million litas (150 million euros), and the facility would break even in approximately 16 years.

The European Parliament added the natural gas-storage project into the list of European priority projects in June. EU directives oblige countries to operate such a facility for a number of reasons, including possible emergencies.

For Lithuania, the issue is particularly acute since the country was deprived of natural gas deliveries for one day after Russia's Gazprom suspended deliveries to Belarus due to the latter country's arrears.

Meanwhile, Lithuanian gas importers have warned that gas prices may rise in wake of the recent surge in crude.

"The rise in gas prices is inevitable," said Viktoras Valentukevicius, CEO of Lietuvos Dujos (Lithuanian Gas), the country's main natural gas supplier. The gap between the prices of crude and natural gas is too wide in Lithuania, he pointed out.

Raimundas Paliukas, president of Lithuania's Gas Association, projected that the price of natural gas might change immediately after the New Year. Heating suppliers have admitted that the majority of measures undertaken to slow the rise in the heating prices have been used up, and they are urging authorities to take measures to restrict gas suppliers' activities.