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The Opening Of The Gas Market Will Not Allow The Supplier To Set A High Monopoly Price

RIGA, Mar 05, BNS -Irklis: The price of Russian gas several times exceeds the costs of extraction and transportation. The price of natural gas received from Russia exceeds its acquisition and transportation costs several times, Rolands Irklis, the new chairman of the council of the Public Utilities Commission (PUC), said in an interview with the BNS business information portal Baltic Business Service.
Asked whether other merchants could offer a lower price than the current monopolist Latvijas Gāze after the opening of the gas market in Latvia, Irklis emphasized that this should be decided by the market. “I have said before that if we compare the costs of natural gas obtained in Russia, which is transported by pipelines, and the costs of liquefied natural gas transported by ships, of course, in the latter case they are higher. At the same time, we see that the costs of natural gas extraction and transportation are not related to its market price. Namely, the price of natural gas received from Russia several times exceeds its acquisition and transportation costs. This price has long been linked to oil prices and has absolutely nothing to do with how much gas actually costs. Consequently, market opening, the emergence of alternative sources is a price security mechanism,
According to him, the data of the European Union market reports also confirm that those countries that have been dependent on one supplier – Gazprom – have higher natural gas prices than those countries that also have alternative suppliers. “Liquefied natural gas in these countries is able to enter markets and compete. For example, in the United Kingdom, where sufficient volumes of liquefied natural gas are supplied, the price of liquefied natural gas has very often been lower than for pipeline gas supplied to us by Gazprom. Therefore, I emphasize once again that it is good that the market will be open and that there will be different suppliers. This means that users will pay the market price, not the price dictated by one side, ”said Irklis.
The agency BNS has already written that on February 11, the Saeima approved amendments to the Energy Law regarding the opening of the gas market in Latvia and the division of Latvijas Gāze. The law stipulates that on April 3, 2017, the natural gas market will be fully open to all users – this means that the price of natural gas will be determined by agreement between the trader and the user. In turn, gradual market opening is planned for household users in order to reduce social tensions. Household users will also be able to choose whether to receive natural gas at the tariff set by PUC or at the market price even after April 3, 2017. Natural gas transmission and distribution tariffs for both legal entities and households will continue to be approved by the regulator.
It was also reported that the Saeima approved Irkli as the Chairman of the Regulatory Council on February 25. Until then, the PUC Council was chaired by Valdis Lokenbach.
PUC is an independent state institution established and operating to regulate the provision of public services in the energy, electronic communications, postal, railway transport, municipal waste management and water management sectors – to protect the interests of users and to promote the development of public services.

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