Latvia may see the first crude oil ever extracted on its territory, as Latvian businessman Uldis Pumpurs said he was ready to start drilling for potential deposits in western Latvia and was now only awaiting the Cabinet to approve the respective regulations.
Oil deposits at Gudenieki, in the west Latvian district of Kuldiga, are estimated to contain around 700,000 tons, though only some 20 percent may actually be extractable.
Pumpurs, who owns two oil wells in Gudenieki county in Latvia's western region of Kurzeme, said that around $1 million of investments would be needed to start pumping oil at Gudenieki, with a return planned in 2 or 3 years.
"Initially I do not plan intensive extraction - around 10 to 15 tons (63 - 95 barrels) a day," said Pumpurs. The oil at Gudenieki is in consistency similar to West Siberian oil, and Pumpurs said he intended to sell his oil on international markets.
At current prices of $28 per barrel, revenues from the Gudenieki deposits would reach almost $25 million.
The oil deposits at Gudenieki reportedly had five owners - three private entities, Gudenieki county and a Danish-owned company, Artis JP. Pumpurs is current negotiating land lease from the rest of the owners so that the entire deposit may be developed.
Negotiations are also being held with Russian, Belarusian and Lithuanian investors on developing the deposits.
As commercial director of Latvijas Naftas Tranzits, operator of the Ventspils Nafta oil terminal, and also a council member at Ventspils Nafta, Pumpurs is experienced in the oil transit business.
He owns the local Uzavas brewery near Ventspils and also co-owns the companies Puses and Energija UJ.
Draft regulations prepared by the Latvian Cabinet of Ministers regulating licenses, taxes and oil extraction could be approved within the next month.
Drilling at Gudenieki would produce the first crude oil ever in Latvia, while Lithuania has been extracting oil since the late 1980s.
The Economy Ministry's oil and gas industry department head Maija Vimba said that the Gudenieki deposits had not been explored thoroughly enough. She added that the state of Latvia would not see much in additional revenues from the extraction, as oil producers "will be paying the state between 2 percent and 12 percent of revenues, depending on the amount."