“Conexus Baltic Grid” concerned about stocks possibly running out

Joint natural gas transmission and storage operator AS “Conexus Baltic Grid” (Conexus) is concerned about traders removing natural gas from the underground storage unit of Inčukalns, as it is likely to run empty by January 2022.

Head of the “Conexus” Corporate Strategy division, Jānis Eisaks, said the challenge this year is the difference in winter and spring prices. The price is currently EUR 30 per megawatt-hour.

“This means that any megawatt-hour purchased by the trader needlessly and stored in Inčukalns is a potential loss of €30 in the spring of next year,” Eisaks said. Consequently, traders are very wary of stockpiling this year.

Conexus is concerned about traders taking gas out from storage at this moment.

“Let’s assume this winter turns out to be like last. Given the risk of high price risks or price differences, it may also be the situation that Inčukalns is emptied by January,” Eisaks said.

Thus, according to Eisaks, in January, only the amount of gas that is currently reserved in accordance with the Cabinet regulations regarding the procedures for the supply of energy users and the sale of fuels during an energy crisis and in case of threats to the State. These are, according to him, three terawatt-hours.

Energy expert Juris Ozoliņš said that the trend is peculiar because traditionally by October 10, traders are not taking gas out from storage but building up its stockpiles. Overall, there is still a tendency to stockpile gas in Europe. Thus Latvia stands out.

At the same time, it is not possible to draw conclusions whether Latvian consumers should worry about this because there is no information on how much of the gas in storage is intended for Latvia. The unit also stores gas for other purposes. The information is confidential and can only be accessed by the state regulator.

“We cannot draw conclusions on how to proceed because we do not know what composition will remain in storage, how supply will work in winter,” the expert said.

He added that there is also the Klaipeda terminal from which gas supplies to Latvia can take place.

Conexus’s largest shareholder is the State-owned “Augstsprieguma tīkls” (68,46%), while 29,06% of shares belong to the Japanese company Marubeni managed fund “MM Capital Infrastructure Fund” and 2.48% to other shareholders.

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