Fuel feud in Ziemelblazma train station

RIGA - Latvia's turn from importing fuel to exporting has brought conflicts costing fuel retailers millions. The ongoing feud between state-owned joint-stock railroad company Latvijas Dzelzcels and fuel companies Statoil Latvia Ltd. and Neste Latvia Ltd. is not likely to end soon, both sides say.

Latvijas Dzelzcels refuses to transport the two fuel retailers' oil through the Ziemelblazma train station, saying it is not fit to handle the heavy loads.

Baiba Rubess, managing director of Statoil Latvia Ltd. strongly criticizes Latvijas Dzelzcels' decision not to move Statoil fuel and their reasons for it.

"They (Latvijas Dzelzcels) said the train station cannot handle the volumes of our cargoes. This is not true, " Rubess said. "When this station was built it was supposed to handle 500,000 tons annually. We are nowhere near that."

Janis Veidemanis, head of the railway department in the Ministry of Transport, said the technology at the oil terminal used in Riga's port only supported loading from ships to train and not the other way around.

"The situation on the world market has changed," Veidemanis said. "It's not necessary to import fuel from Norway and Finland."

Rubess said they asked for tariffs for exporting but were denied by Latvijas Dzelscels since the terminal is not designed for exporting.

"We have an agreement that cargo transported by Latvijas Dzelscels is priced with a certain tariff based on the volume," Rubess said. "Earlier this year, Statoil and Neste started exporting fuel as well."

Veidemanis said Statoil and Neste have plans to go from importing oil to Latvia to exporting it instead, however, this is not possible with the equipment at hand.

"Present technology and agreements have not foreseen this action," Veidemanis said.

To switch from importing to exporting at the Ziemelblazma terminal, new infrastructure would have to be added, according to Veidemanis.

"New technology will be needed to protect the environment and inhabitants in the vicinity," Veidemanis said.

Tapio Jarvinen, sales director for Neste Latvia Ltd., said Neste doesn't think the environment is the issue at all since they have one of the first environmental agreements regarding oil shipping in Latvia.

"We have a feeling we are not welcome to expand our activities in transit business in Latvia," Jarvinen said. "Surely we have tried, and are still trying, to solve the question in good manners, but because of (Latvijas Dzelscels) conduct we aim to take necessary actions, if needed, to defend our position in this case."

Rubess said Statoil and Neste have invested two million lats ($3.25 million) in the railway between the train station and the terminal.

The fuel feud has now reached a new level involving politicians because of complaints from Statoil.

Rubess said Statoil Latvia has lost at least $2.5 million over the last five months because of their dispute with Latvijas Dzelscels.

"We have turned to the Competition Board citing (the railroad's) monopoly," Rubess said. "This will be yet another case that will go to the European Commission and the European Court."

Veidemanis regrets that Statoil took their dispute elsewhere instead of talking directly to railroad representatives.

"It was wrong that Statoil representatives went to politicians and the president," Veidemanis said. "If Statoil and Neste want to export, they will have to meet with (the railroad)."