Latvia's energy dependency
Latvia's energy dependency primarily revolves around its reliance on energy imports, particularly from Russia, and the challenges it faces as it seeks to diversify its energy sources. The nation has no significant natural gas or oil resources of its own and historically has depended on imports for these essential energy needs. In recent years, Latvia has made efforts to reduce this dependency by enhancing energy cooperation with neighboring European Union countries and investing in renewable energy projects, notably hydroelectric power.
Despite these efforts, Latvia's energy system remains interconnected with Russia's, which has been a source of vulnerability, especially after the closure of the Ignalina nuclear power plant in Lithuania in 2009. The Baltic Energy Market Interconnection Plan, initiated by the European Commission, aims to better integrate Latvia with the European energy market. Latvia's energy goals include reducing greenhouse gas emissions significantly and achieving net-zero emissions by 2050.
Moreover, the country is navigating its oil transit role as part of the Russian energy policy, with a significant portion of its oil pipeline infrastructure controlled by a Latvian-Russian joint venture. While Latvia is increasing its use of renewable energy, the path toward energy independence remains complex and fraught with geopolitical implications.
Subject Terms
Latvia's energy dependency
Official Name: Republic of Latvia.
Summary: Latvia has attempted to escape its energy dependence on Russia by developing energy relations with the neighboring European Union states and implementing renewable energy projects.
Latvia does not have a nuclear power station. The country’s energy system is connected with the Russian energy system. In Salaspils (near Riga), a small nuclear reactor operated, which was intended for scientific purposes. The reactor had neither an economic nor a sociopolitical effect on the Latvian energy sector. In 2009, in Ignalina, Lithuania, the second reactor of the nuclear power plant was closed. Therefore, Latvia’s dependence on the Russian energy system and gas imports increased. As a result, the Lithuanian government invited the governments of Latvia, Estonia, and Poland to participate in building a new nuclear power plant in Lithuania.
In 2008, the Baltic Energy Market Interconnection Plan was prepared. It was initiated by the European Commission (EC), managed by J. Barosso. It was designed to integrate the three Baltic states into the European energy market by connecting their energy systems with those of neighboring European Union (EU) states. Latvia implemented Directive 2003/54/EC of the EC and opened the nation’s electric power market. On July 1, 2007, restrictions on entering the market were abolished, and it was allowed to offer lower prices for electric power to electricity-selling companies. Electricity consumers could freely choose their electricity supplier.
Latvia joined both the North Atlantic Treaty Organization (NATO) and the EU in 2004, the eurozone in 2014, and the Organization for Economic Cooperation and Development (OECD) in 2016. Latvia has set goals for reducing its greenhouse gas emissions and reducing its dependence on Russia.
Gas Resources
Latvia has no natural gas resources. In the 19th century, when Latvia was incorporated into czarist Russia, the first geological studies started. After World War II, when Latvia belonged to the Soviet Union, that research was renewed. In 1962, gasification of Soviet Latvia started. The first gas main reached the republic. In 1991, after the reestablishment of an independent Latvia, the new government took control of all gas enterprises, and the national company Latvijas Gaze was established. From 1990 to 1993, usage of gas decreased 53 percent in the country. Most of the gas mains were built 20 or 30 years ago. Individual and corporate users did not have gas meters; therefore, it was difficult to measure the amount of gas used.
Latvia is dependent on gas imports from Russia. The country still does not have alternative gas sources. In 1997, Latvijas Gaze was privatized, and shares were sold to the Russian gas provider Gazprom and the strategic German investor Ruhrgas AG. In 1999, shares were also sold to the Latvian enterprise Itera Latvia.
The Incukalns Underground Gas Storage facility belongs to Latvias Gaze. The storage facility was built in 1968 and is between 765 and 874 yards (700 and 800 meters) underground. The storage facility is filled with gas in the summer, when Latvia receives gas from Russia. In winter, therefore, Latvia cannot depend on the gas main. A part of the gas stored in the storage facility is provided to Russia (Pskov and other areas near the border), Estonia, and Lithuania. It is estimated that in 2022, Latvia imported 801.356 million cubic feet of natural gas, primarily from Russia.
Oil Resources and Imports
In 1964, in the small Latvian town Adze, not far from the village Gudenieki, oil was extracted. Later, the search for oil was continued in the shelf of the Baltic Sea, where several prospective places for oil extraction were found. During the rule of the Soviet Union, 93 borings for research were made. Oil borings were not exploited because oil resources were inexpensively obtained from Russia. Oil borings received more attention when Latvia regained independence from the Soviet Union in 1991. A diplomatic “war” for the oil resources in the Baltic Sea started between Latvia and its closest neighbor and partner, Lithuania. According to various estimates, oil reserves in Latvia range from 250 to 730 million barrels. Several foreign business companies have obtained licenses for oil extraction.
Latvia has become an important part in the Russian oil transit and energy policy. Oil pipelines play an important role in Latvian oil transit. The system of oil pipelines is governed by a Latvian-Russian company, LatRosTrans. Of total company shares, 66 percent belong to the joint-stock company Ventspils Nafta (the biggest oil product transshipment company in the Baltic states), and 34 percent of the shares are governed by a Russian joint-stock company, Transnefteprodukt. The oil pipeline system comprises the oil pipelines in the territories of Latvia, Lithuania, and Belarus. The length of the oil pipelines is 435 miles (700 kilometers); they connect the oil refinery plant Orlen Lietuva in Mažeikiai, Lithuania, with the terminals in Ventspils, Latvia, and Butinge, Lithuania. Three oil pipelines come from Polotsk (Belarus): one to Mažeikiai and two to Ventspils. The capacity of the pipelines to Ventspils is 8 million tons of oil and oil products per year. The dependence of the Latvian oil sector on Russia is evident in the decrease of oil transshipment, which has had a negative impact on the Latvian economy. The company Transneft, governed by Russia, transfers oil exports to the port at Primorsk in Russia in order to affect the position of the Latvian government in respect of Russia. In 2023, Latvia produced 2,000 barrels of oil per day and consumed 35,000 barrels per day.
Sources
About 50 percent of the electric power and more than 36 percent of the heat produced in the country is provided by renewable energy sources. The main renewable resource of electricity is hydroelectric power. Latvia has set goals to reduce its total greenhouse gas emissions by 65 percent from 1990s levels and to become net zero by 2050. Hydroelectricity was its main renewable energy source, comprising 67.5 of its energy generation in 2022.
Bibliography
“Consumption of Renewable Energy Resources in 2015.” Centrala Statistikas Parvalde, Central Statistical Bureau of Latvia, www.csb.gov.lv/en/notikumi/consumption-renewable-energy-resources-2015-44050.html. Accessed 4 Aug. 2024.
"Energy System of Latvia." International Energy Agency, 2021, www.iea.org/countries/latvia. Accessed 4 Aug. 2024.
"Latvia." The World Factbook, Central Intelligence Agency, 30 July 2024, www.cia.gov/the-world-factbook/countries/latvia/. Accessed 4 Aug. 2024.
“Latvia the Third in Renewable Energy in the EU.” Invest in Latvia, 23 Jan. 2024, www.latvia.eu/news/latvia-third-renewable-energy-eu. Accessed 4 Aug. 2024.