Conexus: The results of the first year of the single natural gas market demonstrate its need and future potential

With a view to strengthening national energy independence and making more efficient use of natural gas infrastructure on a transnational scale, the single natural gas market was opened last year, with Latvia, Estonia and Finland joining together. In assessing the results of the first year of operation, the total volume of gas transferred to Latvia increased by 10%, while the number of users of the single natural gas system increased by more than three times during the year, informs the single operator of the natural gas transmission and storage system JSC “Conexus Baltic Grid” (Conexus).

On 1 January 2020, the single market for natural gas was launched - until now there has been an unprecedented interstate cooperation, where Latvia and Estonia form the common balancing zone, while Latvia, Estonia and Finland - the common tariff area. It led to the abolition of payments for crossing internal borders of the Member States of the single market for natural gas and the setting of a single entry tariff for transmission systems at its external borders, thereby facilitating competition between traders of natural gas throughout the single market area.

According to the Chairman of Conexus Board Uldis Bariss, the results of the first year of operation of the single natural gas market already demonstrate its necessity and underline the need for natural gas as an important resource for the European energy sector to continue. "The successful and implemented trans-national cooperation has provided real benefits to all parties involved, while responding positively to the more active use of natural gas infrastructure at regional level. It should be said that this has only been a first step towards overall development, and after evaluating the results of the first year of action, we can conclude how to carry out processes more effectively and move closer to our ambitious goal of creating a single market for natural gas in the region."

As a result of the functioning of the single market, the total volume of excess natural gas in Latvia reached 37.5 TWh in 2020, which increased by 10% compared to 2019. A substantial proportion, 35% of the total Finnish receipts, was passed through the Estonia-Latvia single balancing zone while providing over 35% of the total demand of the Finnish market for Inčukalns underground gas storage (Inčukalns UGS) during the first and fourth quarter of the year. Such high interest in the supply of natural gas to Finland through the Latvian-Estonian balancing zone relates to the current gas price difference throughout the year, namely significantly lower gas prices in the Latvian-Estonian balancing zone compared to Finland.

With the opening of the Single Market, the system users' interest in the services of Inčukalns UGS has increased significantly. This was confirmed by the request for capacity reservation for the 2020./2021. annual storage cycle - by launching a reservation for free capacity for the new season of Inčukalns UGS, the total amount of capacity requested in the reservation applications exceeded the storage capacity available for reservation on several occasions.

The creation of the Single Market Area has also contributed to closer technical cooperation and mutual support between transmission system operators in the Baltic and Finland. A specific technical working group for operators has been set up for this purpose. Following a detailed analysis of the capabilities of the current regional gas transmission system and successful peak tests for the supply of natural gas from Inčukalns UGS to Finland, the technical working group established by the Baltic-Finnish transmission system operators has developed a solution for the temporary increase of the technical capacity of the “Balticconnector” interconnection point by 2 to 5 GWh per day. Closer cross-border technical cooperation has allowed additional capacity to be available to market participants until the Estonian transmission system operator Elering AS has commissioned gas compressor stations that have been delayed to install. The technical capacity of the “Balticconnector” interconnection point is reviewed weekly, while the amount of a specific increase in technical capacity depends on a number of aspects of the use of regional gas infrastructure.

In assessing further development steps, the U.Bariss highlights 3 main areas: the further development of the Single Market Area Platform (, the improvement of the Single Market Area Management System (“back-end”) and the development of the regional gas market.

The development of the Single Market Area platform aims to both collect and implement the requirements set out in user recommendations and to introduce other enhancements and new functionality, including more user-friendly access to information. In addition, work will also be launched on the development and development of the Single Market Area Management System, called “back-end”, which results in a public tender concluding a development agreement with an expected duration of implementation until 31 December 2022.