Latvia, a former Soviet republic, has expressed optimism over possible development of oil resources on its Baltic Sea shelf.
But whatever prospects may exist for Latvia to become self-sufficient in petroleum are faint at least during the rest of this century and highly dubious for the more distant future. It is believed there is no commercial hydrocarbon production anywhere in the former Soviet sector of the Baltic and Latvia's "oil fields" may be only potentially productive structures.
Meanwhile, although Latvia has no oil of its own, it has been able to obtain more foreign currency from re-exports of Russian crude and refined products than from any other source.
Latvian press reports claim "oil fields" have been found in the Baltic near the border with Sweden. They say Latvia's prime minister has met with Swedish and Finnish officials to discuss development of the deposits.
"Special Latvian government representatives consulted with American firms regarding exploration and development of the fields," said a dispatch from Latvia's capital, Riga, published in Moscow's Izvestia newspaper.
"The main difficulty," it said , "is that Latvia has no clear laws to protect its interests in offshore oil development involving foreign partners."
Riga sources concede Latvian oil production prospects are "vague." Latvia apparently has no onshore commercial oil or gas production and must depend largely on imports from Russia.
Moscow reports have referred to discovery of small oil deposits on Sweden's Gotland Island west of Latvia. But the Gotland finds are believed to be marginally commercial at best.
The former Soviet Union did not report successful Baltic drilling near the boundary with Sweden. An upper Ordovician onshore strike at about 2,700 ft near the town of Kuldiga, northeast of the port of Liepaya, was described by the Soviets as an "oil field," but no commercial production has been reported there.
Friction between Moscow and Riga over a pipeline shipping refined products to Latvia's Baltic coast has been a major threat to Latvian petroleum supplies.
This pipeline from Samara, formerly Kuibyshev, on the Volga River to the Latvian port of Ventspils was shut down by Russia last October. Talks were held recently to resume flow through the line, which is the subject of an ownership dispute between Russia and now independent Latvia.
The line's construction was financed by Russia when Latvia was part of the Soviet Union.
Reexports of Russian crude and products were the largest category of Latvian foreign trade during the last half of 1992.
Suggestions have been made that a joint stock company be formed by Russian and Latvian interests to operate the pipeline. But Latvian authorities complain the proposed enterprise favors Russia.
While still insisting that it owns the pipeline, Russia has placed itself in a difficult position by shutting down the line to Ventspils. It has had to deliver petroleum products by railroad to Ventspils at much higher cost.
Latvia is concerned that Russia will expand or build new Baltic oil loading facilities in Kaliningrad province or St. Petersburg, which could make its use of Ventspils unnecessary. But this would require considerable time and put a further strain on Moscow's tight capital construction budget.
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