Overview

Latvia experienced strong economic growth through the 2000s, but has faced significant challenges since the global financial crisis. The country plans to adopt the euro in 2014 and has faced severe austerity to keep its currency pegged to that. It has also seen significant levels of emigration, particularly of the young, which is making recovery difficult.

Latvia is totally reliant on Russia for energy imports. It consumes less gas than Lithuania, but more than Estonia. The country’s main priority is to break Gazprom’s monopoly on energy supply. Part of the Baltic Energy Market Integration Project is to build a LNG import terminal in the Baltic region. Two locations were identified as suitable in Latvia, but it is considered unlikely that either will be chosen. The economic realities of building and maintaining a terminal mean it is more likely it will be located in Finland, which has a larger gas market and the Balticconnector will be built to pipe gas across the Gulf of Finland.

Latvia’s major benefit is that its geology is ideal for gas storage. Inčulkans, the largest gas storage facility in the Baltic, is located in Latvia, and holds enough gas to meet Latvian needs over the winter as well as enabling exports to Estonia and Lithuania. Locating an LNG terminal in Latvia would allow the project to take advantage of this storage capacity.

Balin Energy is exploring offshore Latvia for oil and gas resources. Lithuania produces small volumes of oil from a deposit on the coast and Estonia has a shale oil industry. Latvia is interested in identifying if it has any domestic resources that would provide some energy security.

Page updated: 29/07/2013