Latvia to Offer Offshore Blocks in Licensing Round
The Latvian Economy Ministry has announced a repeat licensing round for exploration and production with the deadline for bid submission to be October 18, 2002. "This is a second attempt of the initial auction we announced April 2001, with the actual area on offer unchanged," Leonids Kvaskovs, an official with the Economy ministry said in a statement.
"The only difference in rules is a cut in company revenue tax to 22 percent from 25 percent," he added. The tender puts seven offshore blocks up for exploration and production as well as 66 blocks for pre-investigation in the Latvian Baltic Sea.
A prospecting license gives the right to carry out initial geological survey of the territory to determine whether it contains oil, but does not allow its holder to start exploration, drilling or production.
In March Latvia gave permission TGS Nopec Geophysical to prepare seismic data of the country's offshore shelf.
Latvia has rules in place for crude prospecting and extraction licenses covering 2,675 square kilometers of continental shelf fields, where reserves of as much as 50 million tons of crude may lie.
The prospecting and drilling license costs 75,000 Latvian lats ($119,700), and the state is expected to take at least 10 percent of the venture. It would also charge a 22 percent tax on profits as well as an oil royalty, to range from two to 12 percent, which would grow as volume increases.
Amoco won an exploration license in 1996, angering neighboring Lithuania which then disputed Latvia's claim to the area. Amoco gave up the license in 1998 due to its merger with BP.
Amoco's Swedish partner Opab still holds a license, which comes into force after both Latvia and Lithuania ratify their sea border agreement. Lithuania ratified the sea border agreement with Latvia in autumn 1999, but the Latvian parliament has yet to do so.