The highest geothermal potential in Latvia is located in the Western part of the country. There is located the third biggest city of Latvia – Liepaja. Geothermal aquifer zone characteristics are indicative for utilization of this energy source for space heating using geothermal heat pumps. The use of an absorption heat pump nearly eliminates energy consumption and operation costs for the heat pump and the design has made it possible to avoid corrosion problems and to reinject millions of cubic meter of saline geothermal water in a sandstone reservoir. Based on the Feasibility Study and supplementary material previously discussed with Latvian authorities it is proposed to launch the Liepaja Geothermal Pilot Project providing an annual heat supply into the Liepaja district heating network corresponding to 300 TJ. Project implementa¬tion should be preceded by appraisal activities financed by the Latvian Government and the Liepaja City Council at a total cost amounting to 1.24 million LVL (1LVL=1.84 US$). The total cost for the subsequent project implementation is assessed at 5.5 million LVL. Financing of the implementation of the project is recommended pursuant to soliciting of a satisfactory financial package comprising local contribu¬tion, bilateral support, international grant(s) and an international bank loan.