Riga deemed best for LNG terminal

  • 2011-07-13
  • From wire reports

RIGA - Riga has been recognized as the most suitable place to construct a liquefied natural gas terminal in a study by British consortium GL Noble Denton and Energy Contract Company on the construction of a regional liquefied natural gas terminal in the Baltics, announced Latvian Economy Minister Artis Kampars (Unity) at a press conference on July 8, reports Nozare.lv. The construction of the terminal, without a link to the Incukalns underground gas storage facility, will cost from 300 to 400 million euros.

As a result, the natural gas rates for households and industrial customers are expected to decrease 5 to 15 percent.
Chairman of the power-utility Latvenergo, Aris Zigurs, explained that the experts analyzed 22 possible locations, including Liepaja, Ventspils, Riga, Lilaste, and locations in the Gulf of Riga.
Riga’s main advantage is the proximity of Incukalns underground gas storage facility. If the liquefied natural gas terminal is built in Riga, it will only require construction of a 30-50-kilometer gas pipe and an additional gas storage facility, which would cost around 100 million euros, said Zigurs.

Member of the European Parliament (EP) Krisjanis Karins (Unity) in an interview on Rietumu Radio on July 5 said that the European Commission (EC) will support construction of the liquefied natural gas terminal only in Riga, whereas it will refuse to fund the construction of a terminal in Klaipeda or Ventspils.
When asked to comment on the discussion about the location of the terminal, Karins admitted that it is all about politics. Lithuania, for example, sustains the discussion only because it relates to its constituency. “Lithuania is even more dependent on Russian gas, and their voters demand immediate solutions. That is why they are so active,” said Karins, adding that Lithuania will not solve anything without the help of Latvia.

In speaking about the discussion in Latvian domestic policy, Karins pointed to the Union of Greens and Farmers, which is highly related to Ventspils. “There is a pitiful custom in our country - if there is some EU money, it goes to Ventspils,” he said. According to the EP Communication on Energy Infrastructure Priorities for 2020 and Beyond, only the cheapest project with the greatest return will get support.

In the July 5 EP plenary session in Strasbourg, voting for the aforementioned communication was to take place. The communication comprises different solutions to end the energy isolation of the Baltic States and their dependence on Russian gas supplies. One of the authors of the report is Krisjanis Karins.

The communication provides for the financial support from the EU in order to end the isolation. The Baltic States have to agree on a single liquefied natural gas terminal to apply for the funding. The communication supports the idea of a single energy supply network in Europe that would ensure safe energy resources traffic and avert problems concerning energy supply. A single EU energy market will not only increase the safety of energy supply, but also ensure the lowest possible price for consumers. It will create new opportunities to include renewable energy resources in the energy market.

The communication indicates new criteria for the construction of energy infrastructure: alignment with the single market, increase in competition, reduction of market concentration, market liquidity, solutions for the dependency on one supplier, and renewable energy resources inclusion in the market.

The six-month work of the Committee on Industry, Research and Energy on EU energy infrastructure development, which will serve as the foundation of EC legislation initiative, will end with voting.
Not everyone is happy with this direction. “Karins is trying to [decide] that the much-talked about liquefied gas terminal be built in Riga,” Ventspils Mayor Aivars Lembergs (For Latvia and Ventspils) said in a statement. Lembergs theorizes that a full-scale campaign has been launched against Ventspils, the city’s residents and Lembergs personally, and the sole reason for this, he claims, is the “unparalleled development of the city since the restoration of Latvia’s independence.”

“So this is little wonder that Krisjanis Karins, just like his party member [Economy Minister] Artis Kampars - who unfortunately has never demonstrated the competence and knowledge required in his job - are shamelessly pressing on with building the liquefied gas terminal in Riga, which is what the Riga oligarchs want. They are doing this although the matter has not even been evaluated by the government’s task force nor the government of [Prime Minister Valdis] Dombrovskis, and it has not yet been decided which of the liquefied gas terminal projects - in Ventspils, Riga or Skulte - would be economically best for Latvia,” said Lembergs.

The ‘Seaside’ mayor concluded that Karins and Kampars seem not to need any economic calculations to make decisions that are of utmost importance for the national economy of Latvia - their “revolutionary conviction” is all that is needed.
Kampars said that he has sent a letter to his Estonian and Lithuanian colleagues with an invitation to organize a trilateral meeting this summer to come to an agreement on coordinated action in achieving common energy goals. The minister believes that the project could receive funding from the European Union, since the European Commission has already announced that it is ready to support the project, if all Baltic States participate in it.

It is planned that the project will be implemented by 2016, initially reducing the Baltic States’ dependence from a single natural gas supplier by 25 percent.