Oil embargo angers mayor, ministers

The oil drought at the Ventspils Nafta oil terminal has remained unsolved, as leading Latvian officials appealed to their Russian counterparts to find a solution to the crisis that is causing acute fiscal harm to Latvia's economy.

Ventspils Mayor Aivars Lembergs, who is also on the oil terminal's board of directors, was particularly passionate in his plea to Russia's government.

"Would you tell us when you will need Ventspils' oil terminal? In a month, in a quarter, never?" he said in an interview to Russian news agency ItarTass.

The embattled mayor said that the lack of certainty was damaging Ventspils and that business partners should know each other's plans for at least two years in advance in order to foster a spirit of cooperation.

In the interview Lembergs denied allegations about the Ventspils port's high costs, which is Russia's chief argument for switching oil exports through its new Primorsk oil terminal on the Gulf of Finland. He said that tanker freight per ton of oil in mid-February this year from Russia's Primorsk port to Rotterdam is $19, whereas Ventspils charges only $9.

The Latvian-Russian joint venture, LatRosTrans, which operates the oil pipeline from Russia to Ventspils, will soon have to decide about whether to close down the pipeline.

Andris Teikmanis, deputy state secretary of Latvia's Foreign Ministry, said that during consultations with Russia the ministry issued a reproach over Russia's embargo on oil transit via Latvia and reiterated that such tactics would not promote economic cooperation between the two countries, which have witnessed a thaw in relations over the past year.

Russia's refusal to use the Ventspils oil terminal also fails to comply with European Union and World Trade Organization principles, said Teikmanis.

In the meantime, oil terminal managers are making contingency plans to find other sources of income should negotiations with Russia drag on indefinitely. Lembergs said that under discussion were plans to transform at least one of the port quays for loading dry cargo vessels instead of oil tankers. Also, some of the port's oil reservoirs may be retooled to allow for storage of other products.

Any breakthrough appears remote. Russian ministers have said that all oil pipelines leading western were now loaded to full capacity and to send oil elsewhere would mean cutting this or that existing load.

Russia's largest oil companies, on the other hand, earlier sent a letter to the Russian government urging to increase oil exports, including resumed transit through Ventspils, but the government replied that no alterations will be made in the export schedule for the first quarter of the year.