Balticconnector gas pipe off line for suspected leak

The Balticconnector gas pipeline linking Estonia and Finland was taken off line on Sunday morning following a sudden drop in pressure because of a suspected leak, Finnish transmission system operator (TSO) Gasgrid Finland said.

Around 02:00 local time on the morning of 8 October an "unusual pressure drop" was noticed by the Finnish and Estonian TSOs on the Balticconnector, leading them to suspect a leak in the offshore pipe. The valves were subsequently shut and the pipeline taken off line. The cause of the potential leak is unknown at present, but strong storms buffeted the Baltic region and Finland over the weekend, with Estonia's rescue board asking the public to stay home. The two TSOs are planning a joint inspection of the line to locate the leak site, but Gasgrid expects that accessing the pipeline for investigation work "is likely to take at least a few days". If a leak is confirmed, then repair work "could take at least several months, depending on the damage", Gasgrid said.

The Finnish market is currently stably supplied by the Inkoo LNG terminal, with sendout dropping to just under 49GWh on 8 October from 72 GWh/d on 1-7 October as a result of downward adjustments to sendout now that transmission capacity towards Estonia is unavailable. The closure of the Balticconnector will have "no impact on the gas supply to Estonian consumers" as gas will be supplied from Latvia, Estonian TSO Elering said.

An extended outage on the Balticconnector could bring significantly more challenges when the weather turns colder later in the year and gas demand increases. No cargo slots have been booked at Inkoo between late November and early March, according to Gasgrid's latest schedule. But market participants have been "instructed to ensure the gas supply they need by ordering it to Inkoo or the Hamina LNG terminal, so that the continuity of gas supply is secured in the coming winter season", Gasgrid said on 9 October. Market participants said that they have shied away from booking winter slots at Inkoo because of ice concerns.

The Finnish government is not planning any additional support measures, such as discounts on slot bookings or government-backed insurance, and remains "convinced that the new situation will increase the willingness to import LNG to Inkoo", Finland's director general for energy, Riku Huttunen, told Argus. "We have best-in-class ice breaking capacity in Finland — this helps regarding ice conditions," he added.

The Inkoo terminal operator will "restrain further reservation requests for available spot slots for the winter period" until more information is received from the TSOs regarding the length of interruption, as the interruption on the Balticconnector may effect the terminal's commercial and technical usability, it said in an urgent market message on Monday. "Best efforts" will be made to publish the availability and schedule on 17 October, it said.

The smaller-scale Hamina terminal also supplies gas to the Finnish grid, from which Estonian supplier Alexela is supplying its customers, the firm told Argus. Alexela has enough gas from Hamina "so our clients are safe", energy portfolio manager Kalvi Nou said, adding that it is "too early to speculate at this point what may happen over the course of winter". But "the longer the outage, the more difficult it will be [to predict]. It depends on whether we are talking about a month or several months", Nou said.

The Finnish market's largest supplier, state-owned utility Gasum, told Argus that the market remains stable. "We are able to deliver gas to Gasum's customers" as there is gas at Inkoo and the upcoming slots at the terminal have been booked. In the case of a prolonged outage, market participants can supply their customers from Inkoo and Hamina. Gasum "follows the situation closely together with relevant authorities and other stakeholders". The firm has five slots booked at Inkoo for this gas year, with one in October and the rest in the second and third quarters of next year, Gasum told Argus.

The sole user of Inkoo in the 2022-23 gas year, Eesti Gaas, did not immediately respond to a request for comment from Argus. The firm's chief executive, Margus Kaasik, told Estonian state news agency ERR that Eesti Gaas' Baltic customers would be supplied with gas stored in Latvia and from a cargo scheduled to arrive at Lithuania's Klaipeda terminal on 10 October. Eesti Gaas "does not foresee any shortage of supplies in the foreseeable future", he said.

Finnish gas, power prices rise

Finnish gas and power prices jumped on 9 October following news of the closure.

The Finnish day-ahead gas price on the GetBaltic exchange jumped from €38.17/MWh on 7 October to €43.19/MWh on 8 October and €46.03/MWh on 9 October.

Similarly, Finnish day-ahead power prices on the Nord Pool exchange rose to €87.07/MWh on 9 October from just €2.22/MWh the previous day (see graph).

The Finnish power generation mix is not particularly reliant on gas, with gas making up just 1.9pc of the overall stack so far this month, according to data from Fraunhofer ISE. But gas is important for meeting dispatchable demand when renewable generation declines. Most Finnish households are not heated directly by gas, with more than 1.4mn heat pumps deployed in Finland out of a population of just 5.5mn. But gas is used indirectly for heating homes, as it is often used in combined heat and power plants and district heating.

By Brendan A'Hearn

Finnish day-ahead power and gas prices €/MWh