By Alexander Miller, consultant in emerging markets. Eurasia Business News, July 30, 2022

Gazprom ceases gas supply to Latvia as of today, 30 July. According to the Russian gas company, the cessation of supplies is the result of a “violation of the conditions for the withdrawal of gas”. Which violations are in question, it is not specified.

On July 29, it was reported that the Latvian operator Latvijas gaze continued to buy Russian gas through an intermediary. Aigars Kalvitis, former Prime Minister and currently Chairman of the Board of Directors of Latvijas Gaze, gas purchases were continuing, from a supplier other than Gazprom and payments were made in euros. The executive refused to publicly disclose the name of this supplier.

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In 2021, about 90% of the gas purchased by Latvia came from Russia. In June 2022, Latvian Prime Minister Krišjānis Kariņš said his country had no plans to resume importing Russian gas. The Latvian government intends to ban russian gas deliveries to the country from 1 January 2023.

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This cessation of Russian gas supply to Latvia is bad news for the economy of this Baltic republic. Indeed, Latvia, has been experiencing high inflation since September 2021.

The rising cost of living, the price of gas, electricity and consumer goods complicates the daily lives of Latvians. The country depends on Russian gas for its energy needs (electricity for industry and population, heating, lighting). Yet their government maintains its hard line towards Russia. LNG gas from the United States will not be enough to cover the needs of the Baltic countries, Poland and Germany. It would be necessary to build more LNG port transhipment terminals, which would take at least three years. Riga’s intransigence could cause significant social and political unrest this winter. Inflation hit a record high of 21% in July.

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