RIGA - Already home to the Baltics' biggest natural gas facility, Latvia may end up supplying Europe with natural gas if current expansion plans for the gas reservoirs proceed. On Nov. 16, Latvijas Gaze announced general plans to spend 31.2 million lats (44.5 million euros) to expand and modernize the gas network over the next four years.
An additional 73.8 million lats will be invested in system safety improvements, and a total of 46.3 million lats will be spent on renovation at the Incukalns facility, Latvijas Gaze President Adrians Davis said.
The Incukalns gas facility, located just outside Riga, currently stores 2.3 billion cubic meters of gas, though its potential storage space amounts to 3.2 billion cubic meters. According to company press secretary Vincents Makaris, once capacity is increased to 3.2 billion, the facility can serve the Baltic region's gas needs for the next 10-15 years.
Latvia has the geological potential to store a whopping 50 billion cubic meters 's or 21 times current level - between 11 different possible underground sites, Makaris said.
However, Germany's E.ON Ruhrgas and Russia's Gazprom are involved in the development of a natural gas pipeline along the bottom of the Baltic Sea, effectively bypassing the Baltic states and delivering Russian gas directly to Germany.
The project will entail building a 1,200 kilometer off-shore natural gas pipeline from Vyborg, Russia to Greifswald, Germany. The pipeline is being built by Nord Stream AG, and is a joint project of three major companies: Russia's state owned gas company Gazprom, and Germany's Wintershall / BASF and E.ON Ruhrgas.
Expectedly, the project has raised fears that the Baltic states will be left behind in the delivery of Russian gas.
Since Latvijas Gaze is partially owned by the same Russian and German companies behind Nord Stream, The Baltic Times contacted the company to see if Latvijas Gaze is planning to connect the Baltic state's gas storage capacity with the Nord Stream project.
When asked about company plans, Makaris said the further development of gas storage in Latvia was necessary not for the Baltic states but for the European Union.
"The potential storage space in Latvia is more necessary for the European Union, and for strategic reserves in the direction of the Nord Stream project," Makaris told The Baltic Times. "Strategic reserves are necessary, for example, in order to cover large demand during the winter, or in the event of an accident or repairs to the undersea pipeline."
Makaris hinted that connecting Latvia to the Nord Stream project was too ambitious for Latvijas Gaze.
"In order to carry out such a project, at least one storage facility will be necessary. For the facility in Dobele, for example, a 1 billion euro minimum investment will be required," he explained. "This kind of project can only be realized by such large businesses as Gazprom or E.ON Ruhrgas. Latvijas Gaze alone could not realize such a project." Indeed, Latvia has the potential to become Europe's gas tank, but it will take coordination on many levels to realize it.
"Right now, there are no concrete plans for the further development of Latvia's gas storage capacity, but everybody knows about the potential," the spokesman said. "No matter what, the amount of gas the EU uses will only grow, and there is potential for this project. In order to take advantage of this unique opportunity, the committed support of the EU and the Latvian government is needed."
According to estimates by Nord Stream, Europe will require some 530 billion cubic meters of gas in 2005, which will grow to 700 billion by 2015. In addition, 75 percent of European gas will need to be imported, as compared with 57 percent in 2005.
And all that gas will have to be stored somewhere.
Latvia's Incukalns facility was built in 1968 to serve the gas needs of the Baltic states and northern Russia. During the summer, natural gas from Siberia is pumped one kilometer beneath the ground at Incukalns, where it is stored under a pressure of 100 atmospheres. The gas is then distributed to Latvia, Lithuania, Estonia and northern Russia to be used during the winter, primarily for heating.
Latvijas Gaze purchases, transports, stores and supplies natural gas. The company's largest owners are Germany's E.ON Ruhrgas, Russia's Gazprom, and Itera Latvija.
