Latvia complains of high Russian gas prices, asks EU for help

The European Union may unite in negotiating lower gas prices with Russia. The issue of price harmonization was raised by Latvia, which pays 30% more than Germany for Russian gas. Energy Commissioner Gunther Oettinger proposed starting another campaign to reduce Europe’s dependence on Russian energy resources.

Europe needs to be united on Russian gas supplies, Oettinger said adding he was ready to support Latvia in talks with Gazprom.

Such issues usually crop up when Europe feels it has an opportunity to squeeze more concessions out of Russia. Qatar with its liquefied natural gas (LNG) and Poland, which claims that its shale gas reserves could meet Europe’s demand, are two favored pressure points.

EU politicians often mention the Nabucco pipeline project as an alternative to Russia’s South Stream project. However, forecasts say Europe’s growing demand for gas will exceed the total output capacity of both pipelines.

“This is more of a political than an energy issue,” said Dmitry Lyutyagin, an analyst with the Otkritiye brokerage. “However, as long as there are no alternative suppliers, I do not think these discussions could pose any real risk or lead to dramatic changes in Europe’s relations with Russia,” he said.

“These statements are part of a consistent policy aimed at changing the basic pricing pattern. At present, Gazprom sets the basic price for each country separately, depending on the market price as of the date the contract is signed. The accepted gas pricing formula is based on the oil price. Discounts or surcharges can be applied once the basic price has been set,” he explained.

Taking the European Union as a whole, in order to review the price, Russia would have to coordinate it across all 27 EU members. If it were to offer spot market discounts, they would equally apply to all. The only difference would be in transportation charges, depending on the distance, Lyutyagin elaborated.

Gazprom owns a 34% stake in Latvijas Gaze, Latvia’s gas transportation, storage and distribution monopoly. In February 2009, Latvijas Gaze signed a gas supply contract with Gazprom, which will meet the country’s needs in full through 2030.

Latvia is one of the EU countries most dependent on Russian gas. A recent report by the European Center for International Political Economy (ECIPE) said that Bulgaria and Latvia were the most vulnerable countries should there be any future disruption to Russian gas supplies.

Source: RBC Daily

Popular Posts:

• Traveller Jalte Norder’s Eurotrip by bicycle: From Sweden to Hungary via Russia
• The real summit of the Americas prostitution scandal
• Latvia: Police search for escaped bear
• Post-revolution, pre-evolution Egypt
• Dancing Vietnam: young country, old memories

BALTIC REVIEW
The independent newspaper from the Baltics - for the World!

info@baltic-review.com

BR

View all posts by BR
Website of author BR