The Baltic coast looks set to get another liquefied natural gas terminal as Latvia steps up efforts to become a regional trading hub for the super-chilled fuel.

Only one LNG import terminal currently serves the Baltic states — the Klaipeda facility in Lithuania — while another is set to start up this winter in Finland, where flows from Russia were cut in May. But as the region pivots away from Russian supplies amid the Kremlin’s war in Ukraine, more terminals are needed. 

With Latvia home to Europe’s third-largest gas storage depot, it can be a natural trading center for the fuel, said Edmunds Valantis, state secretary at the country’s Economy Ministry. Latvian political parties in talks to form a new government have pledged to support construction of the Skulte LNG terminal, which is expected to take two to three years to start operations.  

“Historically, there was only one LNG facility in Lithuania that was built to serve Lithuania, Latvia and Estonia,” Valantis said in an interview at the Americas LNG Summit in Lake Charles, Louisiana. “But now we are interlinked with Finland, which has quite a lot of demand. They are not served anymore by Russia.”

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The race is on to secure alternative fuel supplies. Latvia will prohibit imports of Russian gas from January, alongside Estonia and Lithuania, which also banned Russian LNG. Imports of Russian fossil fuel to Finland ended in May after the country refused to comply with Gazprom PJSC’s new payment terms. 

A tender of interest to build the LNG terminal in Skulte has received several proposals, Valantis said, without being more specific.

For now, Latvian utility Latvenergo AS is seeking to buy six to nine LNG cargoes on the global spot market that can be delivered to the Klaipeda terminal in Lithuania next year. From 2024, Latvia plans to import cargoes under a 10-year supply deal linked to either U.S. or European price indexes, Valantis said.

Even so, Latvia plans to switch to other sources of energy in the longer-term. With a population of 1.8 million, smaller than the city of Houston, Texas, Latvia’s gas consumption fell 34% in the first nine months of 2022, compared to a year earlier.

“In 20 years’ time, we would switch from gas to nuclear” for baseload power, Valantis said.