The Joint Stock Company “Latvijas Gāze” informs that the amendments to the natural gas supply agreement with the OJSC “Gazprom”, which envisage replacement of six-month average quotation of heavy fuel and gasoline in the price calculation formula with nine-month average quotation, have been prepared for signing.

As a result of the changes in calculations, it will be possible to slightly reduce the purchase price in October, which will reflect in the tariffs for industrial customers in November. The prolongation of the calculation period of the average quotation from 6 months to 9 months will also ensure lower monthly fluctuations in both the purchase price and the tariffs for customers.

The JSC “Latvijas Gāze” hopes that in the further months the oil price will remain below 100 USD per barrel and the prices of oil products will fall. At such situation, a decrease of the purchase price and respectively the sales tariffs in Latvia is expected, which will lessen the financial burden during the winter. The natural gas purchase prices are approximately 80% of the average natural gas tariff in Latvia.

The natural gas price is pegged to the price / quotation of heavy fuel oil (with the sulphur content up to 1%) and gasoline (with the sulphur content up to 0.2%) at the oil products exchange FOB ARA (Free On Board Amsterdam, Rotterdam, Antwerp), as well as the ratio of the euro and the US dollar rate as set by the Bank of Europe. With the heavy fuel oil and gasoline quotation (currently, the actual 6-month average quotation is taken into account) and the ratios of currency rates changing, the corresponding PUC-approved tariffs are approved. For customers with natural gas consumption below 25 000 m3 per year, the tariffs are changed on January 1 and July 1 annually. For customers with natural gas consumption over 25 000 m3 per year, tariffs are changes on the 1st date of each month. If the heavy fuel oil and gasoline quotation decreases, so do the tariffs, and vice versa.

Vinsents Makaris
JSC Latvijas Gāze