LATVIA –
The developers of Skulte LNG Terminal call on the government to act decisively and not to give up the idea of building their own LNG terminal right here in Latvia. If Latvia does not determine its own energy policy and continues to depend on the favor of its neighbors for natural gas supplies, our country’s economic lag behind Lithuania and Estonia will deepen. Such decisions are not in the interests of Latvian society, as they threaten all Latvian residents and companies with severe heat and electricity bills. Relying on a favorable price offered by neighbors without owning an LNG supply ecosystem is too short-sighted.
Yesterday, April 11, the controversial statement issued by the Ministry of Climate and Energy (KEM) can be seen as an attempt to hide the inadequacy of the Cabinet of Ministers and to avoid criticism in the future, when both the KEM and the Cabinet of Ministers can be rightly criticized for inaction on energy independence and growing economic backwardness from neighboring countries in the Baltics in promotion. Both Estonia and Lithuania will have their own LNG terminal, but Latvia, as usual, will not have coped with the tasks.
KEM says clearly and clearly that the Latvian government will not look for ways to support the creation of an LNG ecosystem in the interests of our country, but will look for ways to continue increasing Latvia’s energy dependence on neighboring countries. Latvenergo has already provided contractual guarantees to the Klaipėda LNG terminal in Lithuania for its use for 10 years, but now the Latvian government has instructed KEM to look for ways to promote the construction of the Paldiski terminal in Estonia.
It is not understandable why the Latvian government and the Ministry of Climate and Energy are so unwilling to use Latvia’s natural competitive advantage and support the creation of a manufacturing and exporting industry! Why is the opportunity to become the gas supply center of the Baltic and the entire region rejected? Latvia’s treasure – the underground storage of Inčukalna natural gas together with the LNG infrastructure in Skulte would be a solution for obtaining energy independence and would also allow Latvia to participate in the market as an independent player and promote the economic transformation called for by the Prime Minister. Connecting the terminal with Inčukalna, Latvia would have the opportunity to buy gas in the summer months, when it is cheaper, and store it for the heating season, as well as promote the establishment of Latvia as a gas trade center.
We invite you to pay attention to an important paragraph in the KEM announcement: “The Cabinet reviewed the informative report of the Ministry of Climate and Energy (KEM) on the potential of the Skulte liquefied natural gas (LNG) terminal project. Based on KEM’s comprehensive analysis and taking into account the economic interests of Latvian citizens, the Cabinet of Ministers has instructed KEM to start work on the development of conditions for joint use of the Paldiski terminal with the aim of strengthening the security of natural gas supply.”
This raises our questions: where is this “comprehensive analysis” available now if it has not been publicly available until now? How exactly are the interests of Latvian residents to support the construction of a terminal in Estonia known?
In addition, in order to receive special conditions for the use of the Paldiski terminal and the Estonian government to agree to them, the Cabinet of Ministers has / will have to make some credible promises. What are these planned promises that Latvia is ready to guarantee to Estonia, but is not ready to give to developers in Latvia and why?
The Paldisku LNG terminal needs a ship equivalent to the Inko terminal in Finland, the rent of which is 60 million. euro per year. Any participation in the Paldisk terminal will be very expensive for Latvian consumers, as the costs will have to be shared only between Latvian and Estonian consumers and Latvia will have to cover the largest part of the costs (Latvian consumption is approximately 2.5 times higher than Estonian consumption). For comparison, the construction costs of the Skulte LNG terminal will be 150 million. euro.
KEM’s statement says, “KEM has worked with industry experts, investors and other stakeholders to conduct an in-depth study of the need for the Skulte LNG terminal and the overall development trends of the region’s natural gas industry. According to the information obtained, it was concluded that at this moment none of the submitted project cooperation conditions can be evaluated as commercially viable or operationally feasible, and the construction of such a terminal is not possible without significant benefits and guarantees from the state.
We would like to reiterate that in the case of AS Skulte LNG Terminal, the government has not in any way “worked with us as a potential investor”, so this is not true in our case. The government and KEM have not responded to repeated calls to meet, which does not indicate good governance. In addition, if the position is not to support anyone, the question is again relevant, why should the Latvian government support the Paldiski project?
KEM’s statement says: “In order not to create an additional financial burden for consumers and not to contradict the goals of climate policy and the interests of citizens, KEM, after evaluating the information at the disposal of the ministry, concludes that with the current level of consumption in the region, in addition to the already existing terminals in Lithuania and Finland and the reserve berth in Estonia, there is no it is possible to build a commercially self-sufficient liquefied natural gas terminal.”
We would like to point out that the argument of climate goals in this context is demagogic. Gas consumption in Latvia will not decrease depending on whether or not there is an LNG terminal in Latvia. It will decrease when the Latvian electricity production methodology changes in favor of renewable energy. Of course, it will happen in time, but not soon. In the coming years, especially when we disconnect from the BRELL circle, we will be dependent on natural gas, which is used in TPPs for electricity and heat production. Historically, Latvia is the largest gas consumer in the Baltics. Why, in KEM’s view, should Latvia guarantee and make the Estonian terminal “more commercially sufficient”, but not the one intended for Latvia?
About Skulte LNG Terminal:
Skulte LNG Terminal has the unique advantage of being close to the Inčukalnas underground gas storage. It is not necessary to build a platform for unloading liquefied natural gas. This significantly reduces the costs of the Skulte LNG terminal by several hundreds of millions, and allows it to effectively compete with other European terminals. The Skulte LNG Terminal will make it possible to create a huge export potential cheaper and ensure Latvia’s energy independence.
Skulte LNG Terminal requires the construction of a connection to the Inčukalnas underground gas storage, a 39 km long direct pipeline (34 km on land and 5 km underwater) and a ship berth 5.2 km offshore in the open sea. Planned costs — 150 million. euro.
