Gazprom could help Latvia build new plant

  • 2008-04-09
  • From wire reports
RIGA - A senior Gazprom official has hinted that the natural gas company might help Latvia build a new power plant but that it would want a 25 percent stake in the enterprise.
Kirill Seleznyov, vice-chairman of Gazprom's council and chairman of Latvijas Gaze, Latvia's main gas distributor, said that the Russian gas company's participation in any project depended purely upon profitability.
"If Gazprom gets its fair share in the project, if we are interested to participate, then the investment we will make in Russia to ensure the operation of the project might pay off," he told the Dienas Bizness daily.
"Note that we are only interested in economic efficiency, to ensure that gas supplies are profitable," he added.
Seleznyov spoke while Latvia is in the middle of an intense debate over how to provide its energy needs for the future. Many feel that a new, gas-fired plant is the only viable alternative economically 's given natural gas' low cost and relatively low level of carbon dioxide emissions 's while others say this will only increase the country's dependence on Russian energy supplies. The latter feel that a coal-fired plant is a better option.
Regardless, the sheer size of the capital outlays for the gas-fired plant are enormous, about $400 million, and attracting a deep-pocketed investment partner may be too good to resist.
Asked about the possible size of a Gazprom stake in a new project, Seleznyov said it depended on the structure of the project, but considering Gazprom's previous experience, the company would not be interested to get involved in a project in which it held less than 25 percent.

"If we do not get this stake, we are not interested in the project. It is also necessary to see who the other investors are and what Latvia's interests are," the Gazprom executive said.
Gazprom, the world's largest producer of natural gas, owns 34 percent of Latvijas Gaze, while Itera, a private company linked to Gazprom, possesses a 16 percent stake.
Seleznyov declined to name any companies Gazprom would like to work with on a possible Latvian project and indicated that it was first necessary to talk to Latvian energy company Latvenergo, Latvia's state-owned utility.
Addressing the issue of reliability of supplies, Seleznyov ruled out a possibility of Gazprom refusing to supply gas to the new plant.
"Such a possibility is out of the question," he said.
Seleznyov dismissed concerns about Russia as an unstable and unpredictable partner, reminding that Gazprom has never failed to meet its contractual obligations and had no intentions of breaching its commitments in the future.

"Besides, Latvia can decide how to solve the issue of power supplies 's it is possible to build here not only a gas-powered plant but also a coal terminal or a nuclear plant," he said. 
The Gazprom executive projected that the gas power plant in Latvia might be ready in 2.5 years if decisions are made quickly, which would also help reduce costs.