RIGA, April 19 (LETA) - Latvijas Gaze natural gas utility posted EUR 159.819 million in turnover last year, which is 4.4 times less than in 2022, when natural gas prices experienced a huge increase, and the company suffered a loss of EUR 56.911 million as compared to a profit in 2022, the company said in a statement to Nasdaq Riga stock exchange.

The results can be explained by the fact that Latvijas Gaze made corporate income tax payments to the state budget in the amount of EUR 30.5 million for calculated dividends to the company's shareholders.

Latvijas Gaze has also carried out a revaluation of natural gas (inventory), which was purchased at the end of 2022 at a price corresponding to the market situation at that time, thus fulfilling the obligations set out in the Cabinet Regulations No. 503, On the Supply of Energy Users During the Declaration of Early Warning and Alarm Level.

In accordance with the regulations, the company was obliged to maintain 1,150 gigawatt-hours (GWh) of natural gas reserves in the Incukalns underground gas storage facility for household supply during the period from August 10, 2022 to April 30, 2023, reducing the reserved 1,150 GWh each month by the natural gas quantity actually supplied to households in the previous month.

At the same time, Latvijas Gaze statement says that the company, as a public trader, was obliged to sell natural gas at a regulated tariff from January 1, 2023, when the tariff was approved, until April 30, 2023.

According to the tariff methodology, losses incurred by the public trader are compensated by including the price difference in the next tariff period. The next tariff period did not start due to the amendments to the aforementioned law, nor was the transition set from the regulated industry to market conditions that would compensate for the losses caused to the company in the regulated market.

Respectively, Latvijas Gaze had the right to receive compensation for the losses, but the company has not been compensated. At the moment, the company continues talks with the institutions responsible for the energy sector about the possible solution of the mentioned issue.

At the same time, the company points out that, despite lower tension in natural gas markets and lower natural gas prices compared to 2022, natural gas consumption both in Latvia and elsewhere in Europe still remains low.

This is mainly due to low activity in the industrial sector, lower demand in the power sector, warm weather conditions and overall slowdown of the economic activity in the eurozone.

Also, a commitment has been established in the European Union to voluntarily reduce natural gas consumption by 15 percent in the period from August 1, 2022 to March 31, 2024.

One of the biggest challenges for the company in 2023 was the opening of the household natural gas market from May 1. Despite the competitors' aggressive marketing campaigns and pricing policies, the company has done extensive work on the development of new products, sales activities, as well as notably changed the customer service model, which has provided results - after the opening of the household natural gas market, the company has retained 86 percent of the household customer portfolio compared to the number of customers at the beginning of 2023.

In addition, extensive work was done to fulfil the year 2022 decision of the company's shareholders regarding the sale of the company's former subsidiary Gaso. The sale process was successfully concluded in the summer of 2023.

As reported, in 2022 Latvijas Gaze posted EUR 702.604 million in turnover, up 32.5 percent from 2021, while the company's profit increased several times to EUR 40.824 million.

Latvijas Gaze's largest shareholders are Russian Gazprom (34 percent), Rietumu Banka (28.97 percent), German Uniper Ruhrgas International GmbH (18.26 percent) and Itera Latvija (16 percent).

LETA also reported, Energy Investments, a vehicle company established by Latvijas Gaze board members Aigars Kalvitis, Elita Dreimane and Egils Lapsalis, at the end of November 2023 acquired a 28.97 percent stake in Latvijas Gaze from Luxembourg investment fund Marguerite Gas II. The deal was supported by Rietumu Banka.

In order to raise funds for further stages of share acquisition, Energy Investments has, as part of financing the MBO project, sold the issuer's shares purchased in the first stage of management buy-out to Rietumu Banka as financier, with a right to repurchase. The financial instrument sale contract envisages buy-back conditions for a three-year period. During the said period, Rietumu Banka will be an investor and a full-fledged shareholder of Latvijas Gaze.