Finnish and Baltic gas demand continues to rise in Nov

Finnish and Baltic gas demand continued to rise in November, reaching its highest for any month since December 2022.

Combined consumption in Finland and the Baltics in November climbed to 4.47TWh from 4.18TWh in October and 3.61TWh in November last year (see data and download). The year-on-year increase was driven by Finland, where consumption jumped by 76pc, although consumption was also up in Lithuania and Estonia (see country-by-country graph).

While consumption was higher than in November 2022, it was still well below the 2018-21 average for the month of 6.05TWh. Cumulative consumption in January-November was still slightly lower on the year, falling to roughly 34.75TWh from 35.2TWh (see cumulative graph).

Finnish consumption soared to 1.39TWh from 790GWh a year earlier. Demand was up despite Finnish gas-fired power generation falling on the year to an average of 205MW from 251MW, data from grid operators association Entso-E show (see table). This suggests that industrial consumption probably drove the recovery, particularly as industry accounts for roughly 60pc of Finnish gas consumption. Many industrial users switched to alternative fuels where possible last year as prices reached historic highs, although some have returned to gas as prices have fallen. But Finnish demand holding well below the 2018-21 average of 2.09TWh for the month suggests that some users may have stopped using gas more permanently.

Some of this higher consumption was also probably driven by stronger heating demand, with minimum temperatures in Helsinki averaging minus 3.2°C this November compared with plus 0.4°C in November last year. That said, there is very little direct gas consumption from households, making up just 2pc of Finnish consumption last year, with the majority of buildings using district heating. Gas fired roughly 10pc of Finnish district heating production in 2021, but this dropped significantly to 3pc in 2022, as plants switched to alternative fuels, according to data from Statistics Finland. Some of the higher demand may have been driven by these companies switching back to gas.

It was also colder this November compared with the previous year in the Baltic countries, driving up heating demand there as well. In Estonia, the expiry of temporary exemptions given to district heating companies last winter that allowed them to burn alternative fuels will mean an increase in gas use from this sector. This is also true for some district heating in Lithuania.

But ammonia producer Achema's closure of the second unit at its Jonava complex from 31 October for seven months of maintenance will weigh heavily on Lithuanian consumption. Jonava at full capacity accounted for more than half of Lithuania's annual gas consumption and was the largest single gas consumer in the region. The closure of this unit probably explains most of the November drop in Lithuanian consumption from October, although gas-fired power generation was also lower on the month.

The average BGSI price — a volume-weighted average of transactions on a given day — on the GET Baltic exchange dropped by 4pc on the month to €49.35/MWh in November, the exchange said. "The continued isolation of the Finnish market because of the Balticconnector pipeline constraint results in a difference of more than €10/MWh between the price of gas traded on the Finnish and other Baltic market areas. This real-life example shows that in isolated, unconnected markets the price of energy resources is rising," GET Baltic chief executive Giedre Kurme said. The average Finnish BGSI price was relatively stable on the month, increasing by only 1pc to €56.15/MWh, but much higher than the €45.38/MWh in the Latvia-Estonia shared market area.

Total traded volumes jumped significantly on the year, rising by 51pc to 946GWh despite the number of transactions falling by roughly 5pc. Lithuania accounted for 64pc of trades, while Finland made up 29pc and the Estonia-Latvia common market area the remaining 7pc.

Weather biggest factor in December

With the start of the boreal winter in December, cold weather in the region will continue to drive gas consumption this month.

Temperatures well below freezing towards the start of the month caused gas burn for power generation in Finland and the Baltics to soar, and this is likely to continue driving gas consumption over the course of December.

While gas-fired generation has dropped from its peak this month on 4-5 December, it picked up again on 11 December as demand increased and wind generation dropped. Finnish wind generation has been particularly weak this month, averaging 1.07GW on 1-11 December, compared with 1.79GW in November, Entso-E data show. Some of this shortfall has been offset by record nuclear generation, which averaged 4.36GW on 1-11 December, compared with 4.1GW in November. Biomass, peat and coal have also played a bigger part in the Finnish generation stack this month.

By Brendan A'Hearn

November consumption by country GWh

Finnish and Baltic combined consumption Jan-Nov GWh