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. Last Updated: 07/27/2016

Riga: EU, U.S. Join Transneft Dispute

RIGA, Latvia -- Latvia's foreign minister said Wednesday that the former Soviet republic has European Union and U.S. backing against Russian state pipeline monopoly Transneft's decision to halt crude exports to its Ventspils oil port.

Sandra Kalniete said EU Foreign Affairs Commissioner Chris Patten had promised to bring up Ventspils during the EU-Russia energy dialogue in late March.

"I feel and do believe that the EU will support us in this," she said. "Our problems with third parties are now seen as EU problems."

Transneft has not scheduled exports from Ventspils in the first quarter of 2003, stretching Russia's export capacity.

Russian oil firms normally use the ice-free port to ship abroad some 350,000 barrels per day, but this winter without it they have faced delays at other ice-bound Baltic alternatives.

Some traders see the move as part of Transneft's attempts to pressure Latvia into selling it a cheap stake in the Ventspils Nafta oil terminal, which is due for privatization at the end of the year.

But Kalniete said the oil market was wrong in regarding the sale of the government's stake to Transneft as a done deal, adding that the government might call off the sale if it found it impossible to sell the stake under open market conditions.

"There is no certainty at all that we will sell, not at all," she said, adding that she regarded Russia's decision to halt oil shipments to Ventspils as a clear breach of free-market principles.

"It is clear that it is a political decision to exclude Latvia from oil exports," she said.

"It is done to extend economic pressure, to force the Latvian government to sell them its stake. Secondly, it is a strategic decision to gain influence in East European and north European energy markets after our EU accession," she said.

Latvia was recently invited to join both the EU and the Western NATO defense alliance in 2004.

Latvian President Vaira Vike-Freiberga met U.S. President George W. Bush in Washington on Monday, and Kalniete said Bush had raised the issue of Ventspils as he was worried about Russian pressure on Latvia.

"His attitude was that Russia had been recognized as a market economy, and in a market economy the rules of the market must apply," Kalniete said.

She added that she did not expect Ventspils to damage the long-term relations with Latvia's mighty eastern neighbor, adding that Latvia strived to have a good working relationship with Russia.

"But there will be an important landmark when we become members of NATO and the EU, which will change our relationship with Russia," she said, adding that Foreign Minister Igor Ivanov had yet to respond to an invitation to come to Riga to discuss bilateral issues, including Ventspils.