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Gas price cheapens in Latvia

21 December 2010 09:05 (UTC +04:00)

Baku â€“ APA-Economics. The Latvian gas company Latvijas Gaze signed an contract with Russiaâ€™s Gasprom for natural gas supplies in 2011, according to which the purchasing price of gas for this Baltic country will be 15 percent lower than this year, ITAR-TASS reported.

The purchasing price for Russian natural gas is one of the factors that is taken into account when determining gas tariffs for Latvian consumers. Under the new contract, the price of gas will decrease from January 1, 2011 by 4-7 percent for Latvian households and by 5 percent for industrial consumers.

In February of last year, Latvijas Gaze and Gazprom signed a contract for natural gas supplies, under which the Russian company guaranteed a sufficient volume of gas for this Baltic country until 2030.

Latvijas Gaze said the key role in the tariffs is still retained by the purchase price, which, for its part, significantly depends on the oil price and currency rates. Currently, both of them are on a negative trend, therefore the natural gas price in the longer term is difficult to predict. It is necessary to remember that the reduced VAT rate will rise from 10 percent to 12 percent in 2011, and the basic rate will increase as well. Moreover, from July 1, 2011, the excise tax will be applied to natural gas for household and heating needs, which will result in higher end-user tariffs.

Latvijas Gaze is the only natural-gas transmission, storage, distribution, and sales operator in Latvia. The company ensures the supply of natural gas to 442,000 customers in Latvia; during heating season, the company also supplies natural gas, from the Incukalns Underground Gas Storage Facility, to Estonia, northwestern Russia, and Lithuania.

As of December 31, 2009, 34 percent of shares in the company were owned by Gazprom, 47.23 percent belonged to German E.OH Ruhrgas, 16 percent to Itera Latia, and 2.77 percent to other shareholders.