Latvia's gas stocks transfer price to more than double

Market: Natural gas
27/12/23

The cost of rolling gas stocks at Latvia's Incukalns gas storage facility into the next storage year will more than double for 2024-25.

Users will have to pay this tariff for any gas left in storage after 30 April — the end of the annual storage year in Latvia — for which they have not purchased a two-year grouped capacity product. The storage transfer product's tariff will jump to €3.226/MWh excluding VAT from €1.3581/MWh for the previous storage cycle, operator Conexus Baltic Grid said on 22 December. This increase was calculated "using the results of the two-year bundled capacity product auctions in 2023" and in line with Conexus' tariff calculation methodology, it said.

Firms used the transfer product for just over 5.2TWh of stocks for this storage cycle, while users bought 8TWh of the two-year bundled product, Conexus data show.

The need for state reserves to be maintained at Incukalns, the Baltic region's only storage facility, may have increased projected demand for this product. Estonia stored 1TWh at Incukalns this year, while Latvia stored approximately 1.8TWh. Latvia's 1.8TWh of purchased gas remains in storage and has not been touched, Conexus data show.

And stocks at Incukalns started the withdrawal season on 15 October at their highest since 2014, which along with still-muted Baltic demand could mean that a significant amount of gas will be left in Incukalns at the end of the winter. This may be exacerbated by the unavailability of the Balticconnector until at least April next year, which means that gas that had been stored in Incukalns for re-export to Finland during the winter can no longer reach its destination, stranding it in Latvia.

Conexus also announced its auction calendar for the next storage cycle, with auctions for two-year bundled products held every Tuesday during 30 January-21 May, for one-year products on every Thursday in 1 February-6 June, and for interruptible products every Thursday during 20 June-26 September.

Firms booked the entire 22.6TWh of capacity offered for this storage cycle by the end of May this year.

By Brendan A'Hearn

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