Latvia’s government has rejected the request to provide any financial guarantees to Skulte LNG terminal’s developers, said Minister of Climate and Energy Raimonds Čudars at a press-conference on Tuesday, the 11th of April.
At the same time, the minister explained this terminal could be built if one of the developers completes the evaluation of the effect on the environment and constructs this terminal on commercial terms.
Čudars stressed that the ministry has received a mandate from the government to continue negotiations with Estonia on the shared use of Paldiski LNG terminal. Additionally, it is necessary to continue work to resolve the situation under which LNG supplies are potentially impeded by some technical reasons.
The minister explained that
when compared with the start of 2022, when “the government made a number of decisions under stress”, LNG supply infrastructure has improved greatly in the region.
Natural gas consumption in the region is 30% below the supply output of existing LNG terminals.
On Tuesday, the 11th of April, the Cabinet of Ministers was presented with a report from the Ministry of Climate and Energy on the potential of Skulte LNG terminal project.
Discussions about the development of LNG terminal infrastructure development in Latvia started before the global natural gas shocks experienced at the end of 2021 and 2022, after the start of Russia’s invasion of Ukraine. During this time the region’s natural gas system context has changed significantly – in 2022 Lithuanian-Polish connection was commissioned, at the end of 2022 Finland opened Inkoo terminal, and in 2022 the potential LNG terminal’s dock was constructed in Paldiski, Estonia. The ministry stresses that with this LNG network in the region, Latvia has access to important infrastructure.
To perform an in-depth evaluation of the need for Skulte LNG terminal and general gas sector’s development trends in the region, the ministry has worked with leading experts, investments and other involved sides.
According to available information, it was concluded that none of the project’s cooperation conditions are considered realistic.
On top of that, construction of this terminal is not possible without advantages and guarantees from the state.
To avoid creating an additional financial burden for consumers and prevent the country from breaching climate policy goals and residents’ interests, the ministry concluded that with the current consumption level in the region and considering the existing terminals in Lithuania and Finland and the reserve dock in Estonia, it is not possible to construction a commercially self-sufficient LNG terminal.
In addition to the already performed analysis of the potential of a commercial terminal under existing gas supply sector conditions in the region, the ministry has performed an initial conceptual evaluation of alternative solutions to ensure security of gas supplies.
The Cabinet of Ministers has ordered the Ministry of Climate and Energy, together with responsible Estonian institutions, to start working on development of possible conditions for shared use of Paldiski terminal in order to increase security of gas supplies in Latvia. As of March 2023 Paldiski is 100% owned by the Estonian state.
More on this topic: Latvian government rejects Skulte LNG project developer’s and investor’s proposed conditions