Latvijas Gāze: paying for gas in rubles "is possible"

Take note – story published 2 years ago

Gas trading company “Latvijas Gāze” said April 3 it did not see a problem with paying for Russian gas imports in rubles.

A statement published on the company website said it had "a valid long-term agreement on the supply of natural gas until 2030 with Russia's “Gazprom”, which provides for settlements for natural gas in euros. According to the changes in the legislation of the Russian Federation, starting from April 1, 2022, settlements for natural gas supplies made after April 1, 2022 in accordance with the foreign trade agreements of PJSC “Gazprom” for the supply of natural gas abroad (to a number of countries) shall be made only in Russian rubles.

"Assessing the compliance of the said change of the settlement procedure with the previously established sanction regime, the first impression is that such settlement procedure - in Russian rubles - does not formally violate the sanction regime and is possible. At present, Latvijas Gāze continues to analyze in depth the change in the proposed settlement method both from the legal point of view and from the point of view of the Group's business interests," the statement said.

JSC “Latvijas Gāze” Chairman of the Board Aigars Kalvītis – a former Latvian Prime Minister – was also quoted in the statement. Pointedly, he said that the decision not to pump gas in April was not due to sanctions or an ethical response to Russia's war in Ukraine but simply because of prices. 

“The decision not to pump gas through pipelines in April was taken in view of the historically high natural gas prices in April, which would lead to disproportionately high natural gas sales prices to our customers and make such offers uncompetitive,” said Kalvītis.

The company said it continues to supply natural gas to households and other customers in accordance with the obligations of concluded contracts.

Latvijas Gāze is 34% owned by Russia's Gazprom and 16% owned by Itera Latvija, a subsidiary of another Russian energy company, giving Russia-backed companies 50% control of the company. The other major shareholders are the Marguerite investment fund (29%) and Uniper Ruhrgas International (18%).

Latvijas Gāze's willingness to continue doing business with Russia is likely to prove controversial, particularly with international press reports circulating saying that the Baltic states have entirely dispensed with supplies of Russian gas.   

After Latvia regained its independence in 1991, a joint state-owned company “Latvijas Gāze” was established by merging the Latvian gas infrastructure and institutions. The privatisation of the company was commenced in 1997 and completed in 2002.

The unified transmission and storage operator JSC “Conexus Baltic Grid” was separated from Latvijas Gāze in early 2017 under EU unbundling rules, followed by the separation of the distribution system operator JSC “Gaso” on December 1, 2017.

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