At the Cabinet of Ministers (CM) meeting on 22 December, the Ministry of Economics’ draft regulations were approved, providing that from 1 January 2026, the service fee for creating and maintaining strategic petroleum reserves will be reduced from €91.26 to €81.26 per ton of petroleum products.
To reduce overall costs associated with managing strategic reserves in Latvia and ensure more efficient and secure management, a new reserve management model was introduced in Latvia on 1 January 2024. Under this model, by 31 December 2028, strategic reserves will be gradually acquired into state ownership at 100%, purchasing at least 15% of the required reserve volume each year.
This means that as reserves are acquired into state ownership, the costs for service provision related to maintaining strategic petroleum reserves will gradually decrease. At the end of the transition period, the cost of acquiring petroleum products into state ownership will no longer be included in the calculation of the service fee. This will reduce reserve management costs and allow the service fee to be lowered accordingly.
“Given the current geopolitical situation, it is crucial to maintain petroleum reserves that are critically necessary for the state. The petroleum market and supply are volatile and influenced by various factors, so having reserves in state ownership is one of the primary steps to ensure the state’s functions during a crisis. These changes will also significantly reduce the costs of maintaining reserves while ensuring more efficient and secure reserve management,” emphasizes Minister of Economics Viktors Valainis.
Fiscal calculations show that over a 10-year period, the new model will reduce Latvia’s costs for creating and maintaining strategic reserves from €1,636.2 million to €759 million.
The implementation of the new model has already started with very good results – state-owned reserves have so far been purchased in volumes exceeding the minimum required under the Energy Law.
As a result, it is possible to gradually start reducing the service fee from 1 January 2026.
Since procurement procedures for 2026 are still ongoing, and the actual prices for some purchased petroleum products will only be known at the time of delivery, the 2026 budget should be considered indicative and may be adjusted according to actual costs. If market prices for petroleum products fall, the accumulated funds will be used to purchase a larger volume of petroleum products for state ownership than initially planned.