Lukoil looks at Latvian pipeline project

RIGA (BNS) – The Russian oil company Lukoil is interested in the possible construction of a pipeline from its oil deposits in Russia to Ventspils port in western Latvia.

Lukoil Baltija Group Director General Haim Kogan said it is premature to speak about the amount of shares Lukoil could have in the project. The group represents Lukoil's interests in the Baltic states.

Kogan said Lukoil's interest in the project was illustrated by the recent visit to Ventspils of the company's officials which focused on oil transit issues. At this point, however, it is only at the level of negotiations, and it cannot be predicted whether Lukoil will participate in the project.

The construction of the pipeline could cost some $400 - $500 million.

The pipeline's construction is expected to attract Russian companies offering them a 40 percent stake in the project. Latvian and Western companies would get another 40 percent, and the European Bank for Reconstruction and Development will hold the remaining 10 percent.

Kogan stressed that, before the implementation is started, several issues still had to be settled, including the land one, where the new pipeline will be built.

He reminded that oil output in Russia is on the decline given the lowering of oil prices on the world's market and Russia's joining the OPEC's agreement on reducing oil output.

Janis Blazevics, president of construction company Rietumu Caurulvadu Sistema, predicted the new pipeline project could start in two years.