Latvia's plan to win control of its underground gas storage facility from supplier Gazprom took a step forward on Thursday with the aim of making the Russian company sell its stake in the facility. Latvia's parliament approved a second reading of a draft law to spin off the gas transportation and storage business from national gas utility Latvijas Gaze by April 2017.
Parliament is expected to hold the final vote on the bill in spring next year. The draft bill proposes that the gas monopoly will have to be split by April 2017, and the gas storage operator has to be made independent from the current owners of Latvijas Gaze by the end of the same year, or Latvijas Gaze will face fines. That would mean Gazprom having to sell its stake in the future operator of the 2.3 billion cubic metres Incukalns gas storage, Europe's one of the biggest.
It has now 34 percent stake in Latvijas Gaze. Latvia's Economy Minister Dana Reizniece-Ozola told Reuters ahead of the vote that it would be the best outcome if the storage is acquired by the state, which can guarantee that all market participants have an equal access. "That's why it's important to split the company and to have a different management, independent from the current (gas) seller," she said.
Gazprom Deputy Chief Executive Valery Golubev asked the Latvian government to postpone the deadline for selling stakes in the future storage operator during a meeting in Riga last week, Latvian officials said. Latvijas Gaze has said that it held the gas sales monopoly in Latvia under the terms of a privatisation agreement from 1997, and intended to defend it until the agreement expires in April 2017. The European Commission said earlier in December Latvia must open its gas market to competition and to comply with EU rules now the country can access alternative supplies via a liquefied natural gas (LNG) terminal in neighbouring Lithuania. Germany's E.ON, which has 47.2 percent in Latvijas Gaze, is seeking to sell its stake, Latvian officials have said.