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Expert: Important changes to facilitate the natural gas market development and gas supply security are achieved

 

The year 2019 was commenced with approved natural gas storage tariffs, which is a material change in the former natural gas pumping season planning procedure.  The timely approved tariffs facilitate the development and security of natural gas market, and promotes the entry of large and global market players in the market, through their use of Inčukalns Underground Gas Storage (Inčukalns UGS) thus securing the regional role of the storage. Previously it was difficult to accomplish due to different bureaucratical obstacles.

Thanks to the timely approved natural gas storage tariffs, natural gas reservations for the injection season 2019/2020 will be commenced sooner – on 15 January and not in May as it was previously. This allows the sellers to plan timely the needed natural gas flows and volumes for storage at Inčukalns UGS. Since opening of the natural gas market, the market processes and the required regulation in individual positions still adapts to the real circumstances and problems with timely approval of natural gas storage tariffs were one of the stumbling blocks.

Since natural gas is a complicated product that needs precise long-term planning, the market regulations must be subject to the field requirements and specifics. There is no such term as “immediate natural gas supply” for keeping in the storage in this field and when sellers are uncertain for too long regarding the storage costs, very often an alternative solution is found. This is why we are very satisfied, that finally a certain turning point has occurred, and the new tariffs are timely approved. This is an important signal also to the international market players, saying clearly that they can count with Inčukalns Underground Gas Storage and include it in their plans of current season.

Timely preparation for the new natural gas injection season is also an issue of Latvian natural gas supply stability and security, because timely planned activities can increase the filling of Inčukalns UGS that facilitates the availability of energy resource.

During the next natural gas injection season, Inčukalns UGS allows the sellers to choose one of the developed services: product of grouped capacity, market product and virtual flow product. A new two years capacity product is also developed regarding which a storage tariff is already developed and approved.

The maximum value of grouped capacity product tariff applicable to storage cycle 2019/2020 is set to 3.5 euro per megawatt hour (MWh), but the minimum value of market product value applicable to following season is set to 1.38 per MWh, thus the value of two-years grouped capacity product tariff for the combined storage cycle 2019/2020 and 2020/2021 is set to 4,90056 euro per MWh.

The timely approved tariffs are one of the steps towards the required changes affecting the operation of national strategic infrastructure object – Inčukalns UGS. Last year we have started and this year we continue the discussion regarding introduction of storage model that is suitable for market situation of Latvia, because currently, after opening of the natural gas market, the sellers have no compulsory obligations to use Inčukalns UGS  to store the natural gas, the storage cannot cover all infrastructure costs related with its operation. If no reforms are implemented, risk for the security and stability of natural gas supply could appear in very near future.

 

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