At least four enterprises interested in Liquefied Gas Terminal project in Latvia

Photo: Mārtiņš Plūme/LETA
At least four developers have expressed an interest in the liquefied gas terminal project in Latvia, as reported by LTV programme De Facto. Among those are US and Arab companies.
This means that together with the general wish in Europe to lower dependence on Russian gas supplies, Latvia puts in a lot of work into developing alternatives. One such solution is the procurement of liquefied natural gas using tankers and terminals. One was previously built in Lithuania’s Klaipeda. Now talks have commenced about building a second terminal in the Baltic region.
«If we want to continue having gas in the medium-term perspective, we need a second liquefied gas terminal in the Baltic region,» said Latvian PM Krišjānis Kariņš during his speech in the Saeima on 17 March.
Klaipeda liquefied gas terminal’s full output is around 36 TWh per year. This is about as much as Lithuania’s (~20 TWh), Latvia’s (~10 TWh) and Estonia’s (~5 TWh) total consumption together.
However, the output becomes insufficient when you factor in Finland (~30 TWh), which has been part of the same market as Estonia and Latvia for two years, notes De Facto.
«Baltic Connector has been created, and it is very powerful because it can cover at least 70% of Finland’s consumption. Different solutions are considered for Finland. But I agree that Finland is the main market for another terminal. This is why regardless if it is located in Estonia, Finland or Latvia, it will definitely need Finnish clients,» says Conexus Baltic Grid board chairman Uldis Bariss.
When considering solutions, it is not enough to gave a terminal and a tanker full of gas. There are also output factors and the ability to distribute the gas in the necessary direction and in the necessary volume. For example, Lithuanian-Latvian interconnection’s transmission ability is only half of Klaipeda terminal’s output. This is planned to improve by 2023.
«The problem, as usual, is that time is needed to implement projects. This project is planned to double the available output by 2023. Currently, however, we need a solution as quickly as possible. This is why just recently the government has made a decision to prioritize gas from Klaipeda to fill Inčukalns underground gas storage facility. This decision was made in order to guarantee that all traders in Latvia and other countries who order supplies from Klaipeda are able to receive gas from Inčukalns,» said Uldis Bariss.
Plans to reduce dependence on Russian gas or stop using it entirely means new opportunities for the liquefied gas business.
«In Latvia there are entrepreneurs that see this opportunity and have voiced an interest. We will also travel to the US to discuss options to construct this terminal commercially. We will also talk with our neighbours. Because, as I’ve said, it is important for us to have such a terminal in our region and that it is economically justified and based on economic principles,» said Latvian Minister of Economics Jānis Vitenbergs.
The programme reports that the most well-known of previously suggested projects in Latvia is Skulte liquefied gas terminal.
De Facto reminds that this project was in serious development six years ago, but was halted following objections from residents and the government’s refusal to guarantee procurement of a specific volume of gas. To make sure it pays off, half of the gas volume Latvia needs would have to be transmitted through a terminal.
Among the developers is Latvian-born businessman from Texas Pēteris Ragaušs, who has worked in the gas and oil business and National Gas Terminal Association – the full list of members is not public information. His proposal was submitted to the Latvian government. Now, to reduce residents’ objections, it is proposed to build the terminal farther away in the sea. This year developers held talks with Estonian energy policy makers.
«Our partners have experience building terminals all around the world, as well as supply and sale of gas. Unfortunately, we cannot name them – we have confidentiality agreements. There is more than one potential partner. There are potential US investors, strategic investors included,» said LLC Skulte LNG Terminal board chairman Uldis Salmiņš.
Representatives of the project stress the biggest plus is the close proximity to Inčukalns underground gas storage facility.
This will make the use of the terminal significantly cheaper. However, construction of approximately 40 km of pipeline connection with the facility will take time.
This week Saeima National Economy Committee submitted amendments to the Energy law regarding the diversification of supplies. The head of the committee Krišjānis Feldmans mentioned from the Saeima tribune that he is in favour of this specific project: «Lord knows why there are people in Latvia who spread information about Klaipeda working only for Baltic States, that there aren’t any other, completely different… contracts in the other direction. Geographically speaking… Skulte would be the best place, because it would allow us to transmit and store gas. This is business.»
Last week representatives of LLC Kundziņsala Southern project arrived in Ministry of Economics with a proposal. The company has experience developing small-sized liquefied gas terminal in Riga.
The programme reports that previously the company’s indirect owners included Russian-born German citizens. At the end of 2021 the company was purchased by US-based Millenium Energy Partners LLC, which is owned by US citizen Lasha Shanidze. His previous experience included developing gas infrastructure in Georgia and Armenia. Last year they looked for opportunities to enter the Baltic region to develop green energy projects, which is why they acquired LLC Kundziņsala Southern project.
«We look at this region from the perspective of transition to green energy in the future. But as long as changes are in the process, we also look at general opportunities in this region – opportunities we can start with to enter the Baltic market,» says Lasha Shanidze.
Transmission-wise it would be difficult to create a terminal in Kundziņsala that would be able to distribute gas to a bigger region. It is more likely it would be a local solution – for Riga, for example. The company’s owner also affirms his interest to work with other project developers. Such as Paldiski terminal in Estonia.
Paldiski terminal in Estonia is planned to have relative high output, and it is planned to be located not far from Estonian-Finnish connection. This project, too, was proposed ten years ago and remains under development.
Cost-wise it could be similar to Klaipeda terminal. If this project is greenlit, it’s potential advantage would be getting a working terminal the fastest.
The connection between Lithuania and Poland is set to come online in May. Poland has a gas terminal as well. However, it’s output is not enough for entire Poland. Finland also has an interest in building a terminal.
«On the one hand the terminal should be located close to consumers, and we understand that the biggest consumer that has no alternative gas source is Finland. On the other hand, it is also good if the distribution facility is located close to the storage facility. This is why we believe in this situation it would be necessary for Baltic States and Finland to reach an agreement, which would be the most rational solution cost-wise,» admits Uldis Bariss.
The Ministry of Economics affirms that it has been approached by at least four potential investors.
«We have to discuss the topic with regional partners to find the best solution that fits Finland, Estonia, Latvia and, perhaps, Poland – we should put all conditions on the table and find that most economically justified project,» said Ministry of Economics deputy state secretary for energy affairs Edijs Šaicāns in an interview to De Facto.