UPDATE 1-Latvia says companies at sanctions-hit Ventspils port can operate for 30 days

Companies doing business with entities related to Latvia's Ventspils port that have been hit by sanctions can continue operating for 30 days despite U.S. sanctions against local mayor Aivars Lembergs, Latvia's financial watchdog said on Thursday. Ventspils is Latvia's second biggest port after Riga and is a major oil product export route for Belarus, an ex-Soviet country otherwise dependent on financial support from Moscow.

Latvian politician and oligarch Lembergs and four entities that he owns or controls were hit with U.S. sanctions this week on corruption allegations. Lembergs called the allegations "fake news". "We are communicating with the financial sector more now, but if there are companies working at the Ventspils freeport, they have 30 days to continue their operations, there are no changes for now," Santa Purgaile, head of the Latvian banking watchdog, told at a news conference.

The entities are connected to Ventspils port and the Latvian government has declared an intention to take control of the port to ensure it can remain operational. Purgaile also said bank accounts were not closed at any financial institution for the Ventspils Freeport Authority "but their (accounts) supervision will be strengthened."

She said Latvia might ask Washington to extend the 30-day period the U.S. Treasury has given firms doing business with the port to wind down operations with sanctioned entities. Riga had not asked the U.S. Treasury about that yet, Purgaile said. Latvia has been hit by a number of high-profile financial scandals, such as bribery accusations against central bank governor Ilmars Rimsevics and a shutting of ABLV bank on money laundering accusations.

Almost 10 million tonnes of oil products were exported via Ventspils last year and between 35 to 50 oil product tankers enter the port each month, according to the port's data. The port also exports coal, grain, chemicals and other products. A European oil products trader told Reuters ship owners were currently evaluating risks of entering the port as there is no clarity on how sanctions may affect the port's operations.

"They (shipowners) are afraid they won't be let into the port but everything is fine at ours, we are putting a cargo for a loading today in Ventspils," another trading source said. Latvian Transport Minister Talis Linkaits said on Wednesday: "the commercial activity, as far as I know, continues; cargoes are being transported, ships are coming in and out of the port."