De Facto

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De Facto

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LTV's De Facto looks at gas supply situation for next winter

Take note – story published 1 year ago

In anticipation of the next heating season, households have the least worry about gas supply. They will have enough of what is already in Latvia, albeit at a much higher price than in the previous heating season. But will there be enough gas for all other consumers, like enterprises? Latvian Television's De Facto, aired on June 19, aimed to probe the issue.

The rate of gas flow in Inčukalns underground gas storage is currently lagging behind previous years. Following the shutdown of the Russian pipeline in April, gas flowed into Latvia only from Lithuania through a pipeline with a capacity twice as small. The gas from Klaipeda is stored and consumed immediately, including further transport to Finland.

On Thursday, June 16, the flow of the gas pipeline from Russia appeared again. It is not prohibited to purchase it if it does not violate sanctions, but the pipeline operator “Conexus” cannot disclose to whom it belongs.

Latvian gas company Latvijas gāze avoids commenting on commercial transactions but claimed to De Facto that they were not buying anything from Gazprom. A couple of weeks ago, the company's chief executive Aigars Kalvītis explained in an interview to LTV that the payment arrangements should be clarified before purchasing Russian gas.

It appears from the information provided by Conexus that the gas flow in the pipeline from Russia is around 70-80% of the volume currently coming from Lithuania. Russian gas is most likely to be stored in Inčukalns, as the amount of gas pumped has increased in recent days.

The Ministry of Economy (EM) told the De Facto that they were no longer counting on Russian gas.

“All of our plans and scenarios are based on the fact that we have no Russian gas,” said Edijs Šaicāns, the ministry's deputy secretary of state for energy.

In the industry, it is clear to everyone that Inčukalns will not be as full as before.

“This does not automatically mean that we will be out of natural gas because the market has changed and pipeline supplies can continue during the heating season,” said Gunārs Valdmanis, executive director of the Latvian association of electrical engineers and energy construction (LEEA),.

The involved parties that the gas from Klaipeda will flow continuously to Latvia, including in winter. This would allow up to 13 TWh of gas to be pumped into Inčukalna storage until the heating season. There are currently 9 TWh. Last year, at the beginning of the heating season, there were 17 TWh.

It is predicted that expensive gas will not be spent as much. Gas consumption already fell strongly in the first half of the year. For example, Latvenergo now does not produce electricity with gas, and Finland and Estonia are building a LNG terminal. EM is optimistic that with all those resources, there will be enough gas for everyone.

Market participants are not as relaxed. Valdmanis sees the greatest risks in very cold weather conditions: “If a sufficient amount of natural gas is not pumped directly into Inčukalns storage, there could be situations that, for a few days or a week, short-term demand could be higher than the regional infrastructure, including Inčukalns storage, is able to meet.”

“The problem in Latvia is that consumers buy gas relatively slowly for next season, and consumers do not give gas traders the task of pumping gas into storage for them. We have been watching this situation for some time, and at the moment we are, I would say, even in a situation where some consumers do not receive offers from traders because there is no gas to supply," said Roberts Samtiņš, head of the energy trader AJ Power.

The large consumers are waiting in hopes that the gas could become cheaper. This may not happen at all. Meanwhile, traders don't rush to build stocks either.

“The swings are very big in the gas market [..] Prices in Europe have now increased by 30% in two days, according to the latest news that Nord Stream-1 supplies have been reduced. The key issue, which must be stressed all the time, is that legal parties have the summer to buy the gas for next season. Do not wait,” said Šaicāns from EM.

The government gave the state-owned Latvenergo the task of storing gas supplies from Klaipeda at the end of the year. Latvenergo is not yet ready to report the results, but the Ministry says that at least partly it has succeeded.

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