Vitol-owned Latvian firm eyes gas for closed crude oil pipe

RIGA Thu Nov 29, 2012 8:00am EST

RIGA Nov 29 (Reuters) - Latvian pipeline operator LatRosTrans, controlled by global oil trader Vitol, is preparing to convert a Soviet-built crude oil pipeline to transport gas, a decade after Russia decided to shut it off, the company said on Thursday.

LatRosTrans said in a statement it has removed 43,000 tons of crude oil from the 336-kilometre pipeline, which runs from Polotsk, Belarus, to the western Latvian city port of Ventspils.

Now it plans to test an 8.2-kilometre section of the 44-year-old pipeline for transportation of gas next year when cold winter weather receeds, the company said.

"If the pilot project is successful, we will research further to determine if it is possible to convert the whole pipeline," said Ilze Nagla, a spokeswoman for LatRosTrans.

"A pilot project could take 4-5 months and is scheduled to start in spring 2013," she added.

The pipe has capacity of 16 million tons a year but was shut in 2002 when political tensions between Moscow and Riga soured. It was never re-opened, though Latvia has hoped Russia would reconsider its decision.

"This pilot project is very important for us, as, taking into account the geopolitical and economic situation, we are fully aware that this pipeline will never be used again for transporting crude oil," LatRosTrans CEO Igors Stepanovs said in the statement.

Vitol owns 100 percent of holding company Euromin Holding Ltd, which owns 49.5 percent of AS Ventspils Nafta, which in turns owns 66 percent of LatRosTrans. The remaining 34 percent of LatRosTrans is ultitimately owned by Russia's Transneft.

(Reporting By Aleks Tapinsh; editing by Keiron Henderson)

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