TGS Baltic, acting as part of a consortium led by Rothschild, has advised Latvia's Ministry of Economics on the acquisition by Latvian electricity transmission system operator AS Augstsprieguma Tikls of 16.05% of the shares of the natural gas transmission and storage system operator AS Conexus Baltic Grid from SIA ITERA Latvija.
AS Conexus Baltic Grid is a unified natural gas transmission and storage operator in Latvia. The company cooperates with natural gas traders in the Baltic Sea Region in accordance with the tariffs for natural gas transmission system services set by Latvia's Public Utilities Commission. The company manages one of the most modern natural gas storage facilities in Europe – Incukalns underground gas storage – which is considered an important strategic object in the Baltic Sea region.
AS Augstsprieguma Tikls is an independent electricity transmission system operator carrying out the operational management of the transmission system and providing secure, reliable transmission of electricity. AS Augstsprieguma Tikls initiated operations in 1939. All the shares of the company are owned by the State of Latvia, and the Ministry of Finance is the holder of those shares. According to the provisions of the Latvian Energy Law, the electricity transmission system may not be disposed of.
On December 19, 2017, the Latvian Cabinet of Ministers decided to acquire 16.05% of the shares of underground natural gas storage operator AS Conexus Baltic Grid from SIA ITERA Latvija. The transaction was signed on December 27, 2017, and as a result, the State of Latvia currently owns 34.36% of the shares of Conexus, as – on December 15, 2017, prior to the SIA ITERA transaction – AST had purchased 18.31% of Conexus shares from Uniper (as reported by CEE Legal Matters on December 28, 2017).
According to a TGS Baltic press release, "based on the assessment and opinions of the responsible authorities and involved independent consultants, the Government has concluded that the purchase of Conexus shares is an important issue of national energy independence and security. At the same time, by purchasing the shares of Incukalns underground gas storage operator, the State aims to continue the movement towards establishment of the Baltic and Finnish regional gas market by 2020.
It will be possible to fully achieve the goal defined by the Government by ensuring the development of appropriate infrastructure (Estonian-Finnish interconnection Baltic connector and Lithuanian-Polish interconnection GIPL), reaching high market efficiency and equal competition, as well as ensuring gas price alignment with the Central Europe. The purchase of Conexus shares is also a profitable transaction to the Latvian Government based on the assessment carried out according to internationally recognized assessment methods."
The TGS Baltic team was led by Partners Marius Matonis and Andra Rubene and Associate Nauris Grigals. Partner Linda Strause and Senior Associate Mara Stabulniece advised on Energy Law aspects, and Senior Associate Mara Stabulniece advised on State aid regulatory aspects. The team also included Associates Aija Kreicberga, Jekaterina Anohina, Raivis Znotins, Rudolfs Vilsons, and Reinis Grunte.