Lithuania drives September gas consumption in Baltics

Market: Natural gas
12/10/23

Lithuanian gas consumption in September was more than three times higher than a year earlier and helped drive regional demand up by 79pc on the year.

Combined consumption in Finland and the Baltics climbed to 2.77TWh last month from 2.53TWh in August and from 1.55TWh in September 2022. Lithuania and Finland mostly drove these increases, more than offsetting an 18pc decline in Estonia (see graph).

Lithuanian consumption jumped to 1.18TWh in September from just 368GWh a year earlier, after TTF front-month prices hit a record high of €319/MWh in late August 2022. Such high gas prices at the time discouraged ammonia production, as imports were significantly cheaper, prompting the largest regional gas-consuming company, Achema, to halt production, limiting gas use to just over 1 GWh/d in September 2022, data from transmission system operator Amber Grid show.

Curtailments by Achema last year weighed heavily on overall Lithuanian consumption in September, when industry rather than residential heating drives demand. Jonava's second ammonia facility resuming output last month will have constituted a sizeable portion of much higher Lithuanian demand in September.

Meanwhile, Finnish consumption also rose, by about 50pc on the year to 972GWh in September — the sixth consecutive month of annual gains — thanks to higher industrial and power-sector gas demand. But consumption remained drastically below the yearly average in 2018-21 of 1.85TWh, suggesting industrial demand has still only partially recovered and some demand may not return.

Latvia's consumption in September jumped by a third on the year because of gas-fired generation, which was nearly 80pc higher than in September last year. Finnish and Lithuanian gas-fired output also increased significantly on the year (see table), as power prices increased across the Nord Pool area last month.

The average day-ahead gas price on the GET Baltic exchange inched down to €42.07/MWh in September from €42.69/MWh in August, and traded volumes fell to 633GWh from 683GWh, the exchange said. Lithuania accounted for 41pc of trades, while the common Estonia-Latvia market area and Finland made up 32pc and 27pc, respectively.

October reshuffle

The Balticconnector is expected to remain off line until at least April next year, meaning Finland's only sources of gas this winter will be the Inkoo and Hamina LNG terminals.

The outage will significantly alter regional flows and has already driven Finnish spot prices above those in the neighbouring Baltic markets. Higher Finnish prices could make gas-fired plants less competitive, particularly given Finnish hydropower and nuclear production compared with October last year. But Finnish consumption in the near term could remain broadly stable because a 15 October cargo slot is booked at Inkoo, along with a 40-day regasification slot.

Looking further ahead, it remains unclear what will happen after this slot. Interest in booking slots in November-March has been limited in part because of concerns about icy conditions. But with the Balticconnector being unavailable, market participants may be forced to book slots to meet demand from consumers.

And Achema probably will continue to drive Lithuanian gas consumption this month — domestic ammonia production has become much more competitive in recent months as outages in key exporting countries have resulted in significantly higher import prices. In Poland, Grupa Azoty has ramped up its fertiliser production over the past two months and sees signs of improving demand following difficult market conditions earlier this year. "The worst is over," Azoty believes.

By Brendan A'Hearn

Baltic Sep average gas-fired power generation			MW
	2023	2022	±

Estonia	5	4	1
Latvia	194	109	85
Lithuania	103	12	91
Finland	156	120	36
Total	458	245	213
— Entso-E

September gas consumption by country GWh

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