Latvijas Gaze posts profit, upgrades pending

The gas monopoly Latvijas Gaze recorded profits of 10.5 million lats ($17.5 million) last year, up from 8.29 million lats in 2001, but a decision on increasing the storage capacity of the underground Incukalns gas facility has yet to be taken.

Increased sales of 17 percent helped push profits higher last year and the company plans to move forward with extending its network of pipelines, including one that will connect Rezekne in eastern Latvia with Preili by the end of the year.

The Incukalns storage facility has also been earmarked for upgrades, though a working group of the company's main shareholders has yet to officially endorse a specific plan.

The facility currently has an active volume storage capability of 2.10 billion cubic meters of gas.

"It's possible and probably feasible to increase volume to 2.5 billion, but at this moment, the final decision has not been taken," said Andra Jesinka, head of Latvijas Gaze's international relations department.

Adrians Davis, chairman of the Latvijas Gaze board, told LETA news agency last week that the company would like eventually to increase active storage capacity to 3.2 billion cubic meters, perhaps by 2008.

Construction of additional underground storage facilities, however, will depend on the plans of Russia's Gazprom, which owns a 25 percent stake in the firm.

German Ruhrgas owns 25.73 percent, E.ON Energie 17.6 percent and Itera Latvija 17.7 percent. The state holds an 8 percent stake.

Gazprom has floated several pipeline plans, including one to build a pipeline from Finland under the Baltic Sea and via the Baltic states to Western Europe and another to run via Ukraine and Belarus.

Latvijas Gaze has pushed for a pipeline project that would make use of the company's Incukalns storage facility.

"A pipeline through Latvia is the shortest route to Germany and Western Europe, and we could definitely be useful in that with our underground storage capabilities," said Jesinka.

Jesinka said that a gas pipeline via Ukraine would bypass Latvia.

Latvijas Gaze has signed supply deals with Gazprom through 2005 and is now discussing long-term deals that would last until 2015.