After years of preparations and prospecting, Latvian geologists have determined that there could be a substantial quantity of high quality oil in its Baltic Sea waters.
From April 19 through Jan. 25 next year, the government is holding an open tender for any companies that would like to take part in oil prospecting and explorations outside Latvia's coast.
Latvian Minister of Economy Aigars Kalvitis said there's nothing wrong with the idea of Latvia becoming a "Baltic Kuwait."
"I hope we can find serious partners and eventually find some oil," he said.
But Latvia's government should not expect to become a member of OPEC just yet. First of all a company has to take bid, and then when oil is found, if at all, exploration likely will not commence for five or six years, since a platform will have to be constructed on the site, according to Astrids Freimanis, one of Latvia's leading oil experts.
"There are good chances that oil will be found in the Baltic Sea," he said. "Several (deposits) have been discovered already, so now the priority is to go out and drill for it."
There is, however, a small dispute between oil experts and the Latvian government. Freimanis is displeased with the government's decision not to form a state oil company, so the offshore oil project is currently headed by the Latvian Development Agency.
"This sort of company need not be big. Five or six people with aid from foreign experts from Denmark and Norway should be enough," Freimanis said.
Kalvitis defended the government saying it is quite capable of making the right decisions, but he declined to say if this particular decision is right or not.
"A state oil company can be formed at any time, and once established, foreign experts will come in," he said.
The exploration license for this will not be exclusive, but the permission to extract the oil will be. There are three areas which could possibly be explored, which are subdivided in two blocks each. Maris Seglins, director of Latvia's geological survey, is also looking forward to finding oil, saying the Latvian coastal banks are under-explored, hinting geological surveys tell a tale of greasy liquid.
"Oil has been found on shore in small amounts, so there should be no reason why oil can't be found offshore," Seglins said.
However, should oil actually be found, the Latvian state is not prepared to just sit back and let it slip through its fingers. At least a 10 percent share will be state-owned and there are plenty of various taxes and fees to be paid.
Also, any applicant for the exploration rights has to submit evidence to the Ministry of Economy that any damages to environment, people or financial interests of a third party can be recovered.
The general director of the Latvian Development Agency, Maris Elerts, said they will try to attract oil players when the American Association of Petroleum Geologists' conference takes place in St. Petersburg in July.
"I believe the quality of the oil we can find will be of gasoline quality," Elerts said.
The Latvian Ministry of Economy developed the first license for oil works in the sea in 1994 and issued it to the American oil company Amoco and Swedish company OPAB in 1996. But oil exploration works did not get under way as Latvia and Lithuania had not signed their sea border agreement.
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