Identifier
Created
Classification
Origin
07RIGA4
2007-01-03 13:54:00
UNCLASSIFIED
Embassy Riga
Cable title:
No surprises in Latvian gas deal for 2007
how-toVZCZCXYZ0014 RR RUEHWEB DE RUEHRA #0004 0031354 ZNR UUUUU ZZH R 031354Z JAN 07 FM AMEMBASSY RIGA TO RUEHC/SECSTATE WASHDC 3662 INFO RUEHMO/AMEMBASSY MOSCOW 1172 RUEHVL/AMEMBASSY VILNIUS 3786 RUEHTL/AMEMBASSY TALLINN 3990 RUEHBS/USEU BRUSSELS RHMFIUU/DEPT OF ENERGY WASHINGTON DC
UNCLAS RIGA 000004
SIPDIS
SIPDIS
E.O. 12958: N/A
TAGS: ENRG PGOV PREL RS LG
SUBJECT: No surprises in Latvian gas deal for 2007
UNCLAS RIGA 000004
SIPDIS
SIPDIS
E.O. 12958: N/A
TAGS: ENRG PGOV PREL RS LG
SUBJECT: No surprises in Latvian gas deal for 2007
1. Latvijas Gaze (Latvian Gas - LG) announced December 29 an
agreement with Gazprom on 2007 natural gas prices. According to LG,
the wholesale price per 1000 cubic meters (tcm) of gas will increase
by 50 percent starting January 1, 2007 to USD215 per tcm. LG expects
another price increase in 2008 (by about 30 percent),which will
bring the costs of natural gas for Latvia close to Western European
levels. The price increase was not unexpected. Throughout the year,
LG representatives had been preparing the public for a price rise
and Gazprom has long talked about moving Latvia to the same market
prices as other EU member states
2. Although the cost of the gas contract has increased, consumers
will not immediately feel the effect because rates were set by the
regulators before the new contract was signed. Under Latvia's
complicated system for setting retail prices for gas, which is tied
to the price of heavy fuel oils, for the first few months of 2007
the retail price of natural gas will go down by about 3.5 percent
for domestic consumers and 4-5 percent for industrial users. Now
that the delivery contracts are signed, LG can apply to the
regulators for an increase in retail prices, but any increase is not
likely to be approved before the end of winter. Combined with
unusually mild temperatures to date, the effect on the average
consumer of higher gas prices is unlikely to be felt until much
later in 2007.
Antweiler
SIPDIS
SIPDIS
E.O. 12958: N/A
TAGS: ENRG PGOV PREL RS LG
SUBJECT: No surprises in Latvian gas deal for 2007
1. Latvijas Gaze (Latvian Gas - LG) announced December 29 an
agreement with Gazprom on 2007 natural gas prices. According to LG,
the wholesale price per 1000 cubic meters (tcm) of gas will increase
by 50 percent starting January 1, 2007 to USD215 per tcm. LG expects
another price increase in 2008 (by about 30 percent),which will
bring the costs of natural gas for Latvia close to Western European
levels. The price increase was not unexpected. Throughout the year,
LG representatives had been preparing the public for a price rise
and Gazprom has long talked about moving Latvia to the same market
prices as other EU member states
2. Although the cost of the gas contract has increased, consumers
will not immediately feel the effect because rates were set by the
regulators before the new contract was signed. Under Latvia's
complicated system for setting retail prices for gas, which is tied
to the price of heavy fuel oils, for the first few months of 2007
the retail price of natural gas will go down by about 3.5 percent
for domestic consumers and 4-5 percent for industrial users. Now
that the delivery contracts are signed, LG can apply to the
regulators for an increase in retail prices, but any increase is not
likely to be approved before the end of winter. Combined with
unusually mild temperatures to date, the effect on the average
consumer of higher gas prices is unlikely to be felt until much
later in 2007.
Antweiler