Sufficient volume of gas has been booked in Incukalns storage facility to ensure gas supply to households - ministry

RIGA - The volume of gas booked in the Incukalns underground gas storage facility in the name of Latvijas Gaze is more than sufficient to  ensure gas supply to households, representatives of the Economics Ministry told LETA, citing  information provided by unified gas transmission and storage operator Conexus Baltic Grid (Conexus).

On receiving information from Latvijas Gaze gas utility that the company might not be able to provide gas to consumers as required by law, the Economics Ministry drafted and the government approved on Tuesday a regulation to ensure the protection of households and  regular gas supply to the households at the approved rate, Economics Minister Ilze Indriksone (National Alliance) informed. 

Should Latvijas Gaze have difficulties ensuring gas supply to the households, Conexus and Latvenergo energy company will provide necessary support. Indriksone plans to meet with Latvijas Gaze representatives soon to discuss the situation. 

The Economics Ministry's representatives indicated that already on March 9 the government issued an early warning on gas supply with the aim to prioritize gas flows, giving primacy to gas flows from the Klaipeda liquefied natural gas (LNG) terminal via the Lithuania-Latvia and the Lithuania-Poland interconnections. 

The government has made timely preparations to make sure that if Latvijas Gaze is unable to meet its contractual and legal obligations, Latvenergo and Conexus will take over and ensure  regular gas supply to households for the approved price, the ministry said.

As reported, Latvijas Gaze natural gas facility as of August 31, 2022, will not be able to provide the obligation of a public trader specified in the Energy Law to store the required amount of natural gas reserves in the Incukalns underground storage facilities, the company said in a statement to the Nasdaq Riga stock exchange.

In a situation where the existing public trader (Latvijas Gaze) does not fulfill the task set by the law, the functions of the public trader are taken over and performed by Latvenergo power utility.

Latvenergo representatives told LETA that the Cabinet of Ministers adopted regulations on Tuesday, ensuring that natural gas in Incukalns facility is reserved for the needs of Latvian consumers for the whole heating season.

In a situation when the government makes the decision that Latvenergo has to take over the household client portfolio, we have sufficient resources to do that, Latvenergo said.

Latvijas Gaze has repeatedly informed the government and the Ministry of Economy responsible for the development of the energy sector about the aforementioned situation, as well as requested to convene a meeting with all parties involved in the event of a possible change of public trader, in order to find a constructive and coordinated action plan, which has not yet taken place.

Amendments to the Energy Law come into force on August 11, 2022, while paragraph 68 thereof stipulates that the fourth paragraph of Section 106 of this Law (i.e. the Energy Law) (which provides for a ban on the supply of natural gas from the Russia) shall come into force on January 1, 2023. Thus, Latvijas Gaze is prohibited by law from receiving natural gas from the Russian Federation after January 1, 2023.

Latvijas Gaze within the framework of its economic activity performs the necessary actions to continue providing natural gas services by purchasing it from other alternative suppliers.

Article 107, Part 4, Clause 3 of the Amendments to the Energy Law instructs the public trader of natural gas to ensure that, no later than August 31 of each year, the amount of natural gas required for the consumption of households (related users) for the period from October 1 to October 30 of the following year in April is stored in the Incukalns underground storage facilities.

As of the date of publication of this announcement, the amount of natural gas belonging to Latvijas Gaze, located in the Incukalns underground gas storage facilities, amounts to 0.75 Twh. On the other hand, as of August 31, 2022, taking into account the contractual obligations already undertaken, the amount of natural gas owned by Latvijas Gaze and stored in the Incukalns underground facilities, will amount to 0.69 TWh.

Taking into account the aforementioned and the adopted amendments to the Energy Law, which stipulates that as of January 1, 2023, natural gas supplies from Russia are prohibited, Latvijas Gaze announces that as of August 31, 2022, it will not be able to provide the obligation of a public trader specified in the Energy Law to store the required amount of natural gas reserves in the Incukalns underground storage facilities.

As reported, the government decided on Tuesday that as of August 10, Latvijas Gaze should store 1.15 TWh of natural gas in Incukalns for the supply of households in Latvia.

The government has earmarked natural gas for the needs of households stored in Incukalns underground gas storage facility, said Prime Minister Krisjanis Karins (New Unity) in a press conference after the government meeting on Tuesday.

The government decided to earmarked natural gas now belonging to Latvijas Gaze so that this gas is not sold further in case of high demand, but would remain in Latvia for the needs of Latvian households.

Economics Minister Ilze Indriksone (National Alliance) said that the earmarked amount is 1.15 TWh of gas, which is the level of household consumption of natural gas last season.