On the conditions of settlements for natural gas imports into Latvia going forward

The JSC “Latvijas Gāze” has a long-term agreement with the PJSC “Gazprom” on natural gas supplies in 2000-2030. So far, as stipulated by the agreement, payments for supplies have been made in the EUR currency.

Since March 31, 2022, there have been changes envisaged in the procedure of settlements for natural gas imports into Latvia.

The JSC “Latvijas Gāze” has not made any natural gas purchases from the PJSC “Gazprom” since the introduction of the changes. There are both political and commercial reasons to the decision of not purchasing natural gas. The stance of the European Commission and Latvia regarding the changes in the procedure of settlements is still not clear, and the natural gas market price is economically uncompetitive and excessive.

On April 23, 2022, the international news agency “Reuters” published an article titled “EU says pay for Russian gas in euros to avoid breaching sanctions” which refers, inter alia, to a guideline document on the issue of settlements drafted by the European Commission and sent to the member states. The article also says that the guideline document mentions options whereby businesses could legitimately pay for gas, but at the same time stresses that the procedure which envisages deviations from the decree issued on March 31, 2022 by President of the Russian Federation V.Putin is not entirely clear.

Having regard to this information circulating in the public international media and the fact that the text of the guideli ne document is available neither on the European Commission’s official website nor on that of the European Council, the JSC “Latvijas Gāze” has asked the Ministry of Economy as the competent authority in charge of the energy sector and the sectoral policy to explain whether the above procedure of settlements may be compatible with the requirements of the sanctions regime against the Russian Federation in order for the JSC “Latvijas Gāze” to be able to plan its further business activity and continue fulfilling its obligations as public trader towards more than 350,000 household customers.

The JSC “Latvijas Gāze” has also approached the Financial and Capital Market Commission with a request for a special permit for changes in the procedure of settlements with the PJSC “Gazprom”. No answers to the said requests have been received at the records office of the JSC “Latvijas Gāze” yet.

The JSC “Latvijas Gāze” currently has sufficient natural gas reserves to afford waiting for a more commercially attractive natural gas price. As soon as the natural gas market situation allows, the JSC “Latvijas Gāze” will resume buying natural gas.

On behalf of the JSC “Latvijas Gāze”,
Chairman of the Board
Aigars Kalvītis

On the JSC “Latvijas Gāze”

Latvijas Gāze is one of the leaders of the Baltic energy industry.

Our goal is to consolidate the leading position of the Latvijas Gāze Group in the Latvian and Baltic energy market by becoming the customers’ first choice among natural gas suppliers and providing the most reliable natural gas supply for the entire region.

The wholesale and sale of natural gas to business customers is carried out in Latvia, Lithuania and Estonia. Following the opening of the Finnish gas market on January 1, 2020, Latvijas Gāze has successfully started natural gas trading in Finland as well. In the household segment, Latvijas Gāze is the biggest and most prominent natural gas trader in Latvia.

After Latvia regained its independence in 1991, a joint state-owned company “Latvijas Gāze” was established by merging the Latvian gas infrastructure and institutions. The privatisation of the company was commenced in 1997 and completed in 2002. Since February 15, 1999, the shares of the JSC “Latvijas Gāze” have been quoted on the Nasdaq Riga stock exchange. Taking into account the requirements of the European Union for the establishment of the natural gas market and the expiry of the privatisation agreement between the state and the shareholders of Latvijas Gāze, the unified transmission and storage operator JSC “Conexus Baltic Grid” was separated from Latvijas Gāze in early 2017, followed by the separation of the distribution system operator JSC “Gaso” on December 1, 2017.

Contact information:
Sandra Joksta
[email protected]
phone + 371 67 374 369

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