Latvian Gas TSO Certified on Conditions

Conexus Baltic Grid (Conexus), a hived-off company of Latvijas Gaze, has been certified by Latvia’s public utilities commission, the watchdog, as an independent natural gas transmission and storage system operator. But there are some extra conditions, related to the fact that it is not fully unbundled: Russian gas exporter Gazprom owns 34.1% of both.

First, Conexus must demonstrate that Gazprom has no possible means of exerting control on Conexus. Second, Conexus has to prevent the risks of conflict of interests posed by Marguerite Gas I and Marguerite Gas II's participation in both Conexus and Latvijas Gaze. Conexus  will have to report to PUC once every two months on the progress and the steps  it will take to ensure the satisfaction of the conditions.

Reportedly, the European Commission (EC), which  first warned of Gazprom’s potential direct or indirect control in the companies in  August, has also approved the PUC decision.

The EC said that Conexus’ shareholder Marguerite Gas I is linked to Latvijas Gaze shareholder Marguerite Gas II through a parent company, Marguerite Holdings, which in PUC’s and EC’s view creates a conflict of interest.

Marguerite Gas I has 29.06% in Conexus, Latvia‘s independent power grid operator Augstsprieguma Tikls holds 34.36% and other shareholders have 2.48%.

Conexus submitted a certification application to the PUC January 10, 2018. PUC head Rolands Irklis said at the very start that the fact that Gazprom still remains a Conexus shareholder might be an impediment to the operator’s certification.

According to Reinis Aboltins, a Latvian energy expert, if Conexus had failed to win certification, the Latvian authorities would have put more pressure on the management of Latvijas Gaze and Conexus. There have long been rumours that the Latvian government does not like Gazprom dominating the national gas market but that cannot be changed now,” the expert told NGW.