Gazprom and Latvijas Gaze agree on new natural gas supply

UNCLAS RIGA 000930 SIPDIS SIPDIS E.O. 12958: N/A TAGS: ENRG EPET ECON PREL RS LG SUBJECT: Gazprom and Latvijas Gaze agree on new natural gas supply contract ¶1. Latvijas Gaze (LG),the central natural gas provider in Latvia, announced on December 14 that it had reached agreement on a new supply contract with Gazprom for 2008-2010. In line with Gazprom's pricing policy and its efforts to even out gas prices across Europe, the new tariff for Latvia will be higher than in previous years. The rate will be in part tied to the global price of oil, and LG projects an overall increase of up to 50% relative to 2007. ¶2. Andris Piebalgs, the European Commissioner for Energy and a native Latvian, in a recent interview with Diena, Latvia's largest newspaper, expressed concerns about Latvia's firm opposition to EU initiatives on dividing up energy markets and limiting monopolistic behavior. Piebalgs stressed that Latvia should be working on decreasing its dependency on a single energy provider, not vice versa. Piebalgs specifically criticized Latvia's resistance to the so-called "Gazprom clause" that calls for separation of energy production and the ownership of supply infrastructure, such as pipelines. He noted that the clause would help Latvia decrease its dependency on its only natural gas supplier - Gazprom, and added that not having control over the supply infrastructure will prevent Latvia from choosing an alternative natural gas supplier in the future. SELDOWITZ