Latvia suffered from three years of consecutive economic contraction before returning to positive growth since 2011. The recovering economy provided a boost to commercial activity and increased transport fuel demand, but over the longer term we expect oil demand to gradually decline, driven by fuel efficiency gains .With no domestic refining capacity, oil demand is satisfied entirely by imports, sourced mostly from Finland and Lithuania. Although there isgood access to independent storage and distribution infrastructure,the Latvian retail fuel market is dominated by three international companies: Neste Oil, Statoil (Circle K) and LUKOIL. LUKOIL divested its Latvian retail business in 2016, but the brand will remain for the next five years. The Latvian government has increased fuel excise duties for diesel, gasoline and LPG from January 2016, which is likely impact demand and profitability in the near term.