Latvia's LNG terminal plan stalled

Take note – story published 1 year and 1 month ago

Over the past months, the Latvian government has treated the plan to build a liquefied natural gas (LNG) terminal in Skulte, Latvia, as urgent, and then withdrawn from the project. Experts' thoughts on whether Latvia needs its own terminal differ, Latvian Radio reported on May 3.

This week Estonia's climate minister Kristen Michal announced that Latvia and Estonia are preparing an agreement that would allow joint purchases of liquefied natural gas in the event of a shortage.

Meanwhile, the Latvian Ministry of Climate and Energy reported that nine terawatt-hours of natural gas are waiting for use in Inčukalns storage, which is two terawatt-hours more than a year ago. The country has, however, reserved two terawatt-hours for unsafe times from this volume, and this would be enough for about a quarter of what it needs for the whole season.

Prices have now fallen significantly and experts are also predicting a rise in gas consumption. Minister for Climate and Energy Raimonds Čudars said the transshipment capacity of already existing Baltic and Finnish terminals is twice as high as consumption.

“At the same time, we may have a situation where, for some technical reasons, gas supplies can be difficult. This is where the government is working with our northern counterparts from Estonia on the possible emergency use of the Paldiski terminal in a situation where, for some technical, unexpected reasons, natural gas supplies to the region would be difficult,” the minister said.

In times of uncertainty a year ago, there were talks that the government would contribute to the development of the Latvian Skulte LNG terminal with budget money. Now the government has stepped back from cooperation, and the project has been frozen, said its chief executive Uldis Salmiņš.

"It's not that we are announcing the suspension of the project, but it's true that in such circumstances we find it difficult to persuade investors to make active investments at a rapid pace. There is no political support for such a project at the moment, despite the adoption of the law and the government's decision at the time," Salmiņš explained.

He believes the government will have made a mistake. He stated that Klaipeda has announced fully sold capacity for the next 10 years, while Finland's terminal capacity will be needed to supply all of Finland and Estonia. Developers of the Skulteproject forecast that Latvia will need up to 16 terawatt-hours of gas per season in the medium term, which would be near double the previous frugal season.

The energy expert Juris Ozoliņš estimated that the government had done the right thing in the past after the chaotic decisions.

“At the moment, the question of Skulte is an absolutely economic question whether anyone is interested in it or not. Because we have full access to a terminal. Assets always pay money, and asset maintenance also pays money,” Ozolins said.


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