English
The gas terminal is envisaged for balancing of power system in the Baltic States at large and adding of Baltic market to the common gas market of the European Union (EU), thus the project could ensure self-sufficiency in energy to all three Baltic States.
Ministry of Economics of the Republic of Latvia and the European Commission (EC) considers that construction of such station should be assessed in the context of power supply in the Baltic States, and geographic location of Latvia – center of the Baltic Region – would ensure also further development possibilities to Inčukalns gas storage facility. Gas storage facility can be enlarged to 3.2 billion cubic meters and ensure pumping of LNG directly into the storage facility, purchasing the gas during its lowest price period and storing it in underground storage facilities.
Ēriks Škapars, Member of the Board at the Freeport of Riga and representative of Ministry of Finance, emphasizes: “Location of the Riga Port and current infrastructure are ideal for construction of appropriate terminal. If necessary, we can use not only Inčukalns storage facility, but also develop underground gas storage facility in Dobele. Both Dobele and Inčukalns are located comparatively close to Riga which is the biggest consumer of gas in Latvia. From the point of view of Europe, the big underground storage facilities could turn Latvia into logistics centre of European gas market with accordant economic effect.” On 14 December 2010, in the meeting of the Coordination Council for Large and Strategically Important Investment Projects, offer of Ministry of Economics on implementation of project of liquefied natural gas terminal was reviewed and conceptually supported, commissioning elaboration of the initial assessment of the project to “Latvenergo” JSC until mid of 2011.
Olafs Pulks, Member of the Board at the Freeport of Riga Authority and representative of Ministry of Economics, notes: “Though it is a joint project of Europe and the Baltic States, benefits of Latvia should be assessed as the primary ones when evaluating potential construction sites of the terminal. What exactly can Latvia gain from this project?! First, it is gas price to consumers, which is notably affected by delivery expenses. Almost half of inhabitants of Latvia live in Riga, thus delivery expenses to half of inhabitants and industrial enterprises of Latvia, forming the absolutely largest part of the total gas consumption, would be minimal. It would allow to reduce gas rate also in the entire state.”
Riga is also the most advantageous location for efficient use of current gas storage and transmission infrastructure. Network of current gas pipes ensures pumping of gas to Inčukalns storage facility, without making any additional investments. Also, gas pipes have already been built from Riga to most of the cities of Latvia.
When assessing Ventspils, it should be recognized that enormous additional investments will need to be made in construction of gas pipe because this is one of the cities where no gas transmission infrastructure has been established. The average gas rate will also be notably increased by delivery expenses to consumers.
Costs of liquefied gas have gradually decreased during the last two decades from approximately 700 dollars per ton to 400 dollars per ton in 2010. Assessing processes, it can be prognosticated that price of liquefied gas could continue to decrease also in coming years. The process is based on development of technologies, as well as comparatively low demand for this product in the world, which is determined by development stage of gas infrastructure and technologies in each particular state. In this field, Latvia is one of the most secured states in the region. With liquefaction and transportation technologies developing, delivery expenses will decrease, but in long-term contracts attachment of prices of natural gas carried by pipelines to oil prices will be reduced.
