Latvijas Gāze                                                       10.11.2005



JSC “Latvijas Gaze” information about oncoming changes in gas purchase price



JSC “Latvijas Gaze” informs that natural gas supplier PJSC “Gazprom” is 

reconsidering current agreement about the gas purchase price and taking into 

account the rapid changes during this year in the fuel market to oil and its 

products starting from January 1, 2006 increase in purchase price for gas from 

Russia will be by around 30% more than planned previously. Herewith 

JSC  “Latvijas Gaze” will prepare new changes in tariffs that will be 

submitted to the Public Utilities Commission in the nearest future. The 

purchase price constitutes about 2/3 of the natural gas tariff.



The oncoming changes in gas price relates to price increase for heavy fuel 

oil, which is oil product. Gas purchase price and gas sales price in Latvia 

are connected to prices of heavy fuel oil since the heavy fuel oil is the 

closest substitute to natural gas or the easiest replacement fuel for the 

major part of JSC “Latvijas Gaze” customers. Similarly the natural gas price 

is set also for customers in Europe, which is in line with international 

practice and standards. The price for heavy fuel oil similarly as price for 

oil and oil products has experienced sharp increase – from approximately 

150 USD/t up to 310 USD/t. Natural gas prices have raised significantly in all 

European countries.



 With decrease in oil and heavy fuel oil prices also gas purchase and sales 

prices will decrease in Latvia.



Also the Minister of Economics of the Republic of Latvia Krišjānis Kariņš 

has been acquainted with the situation in the energy resource market and 

oncoming changes in gas purchase prices, these and other hot topics were 

discussed at the beginning of November during the meeting with A.N.Rjazanov – 

the Vice-Chairman of the Board of PJSC “Gazprom”.



At the end of 2004 JSC “Latvijas Gaze” and PJSC “Gazprom” concluded an 

agreement about gradual natural gas purchase price increase from 2005 to 

2007. The reason for price reconsideration was price increase for oil, oil 

products and gas in the World, as a result of which the supplier made 

changes in gas supply prices to several European companies, including the 

Baltic States. Taking into account these circumstances during this year the 

Public Utilities Commission approved price increase in gas sales prices in 

Latvia, which foresees tariff increase depending on amount of gas consumed 

starting from January 2006 by 6,3%-20,0%, but in January 2007 additional 

tariff increase by 6,7%-22,1%. Currently the approved tariffs do not cover 

the expected expenses related to the increase in gas purchase price. Without 

approval of new tariffs for consumers in Latvia it is forecasted that the 

Company will operate with significant losses, which in turn will prohibit 

carrying out the modernization of the system, stable supplies and providing 

the system’s safety.



Commercial representative     

Vinsents Makaris

Phone .7369144