After the high demand for natural gas in the world markets and the tension with the purchase of natural gas last year, AS “Latvenergo” has made strategic decisions in order to receive safe and balanced supplies by concluding a long-term contract for the use of the Klaipėda liquefied natural gas terminal, which allows importing natural gas in the amount of up to 6 TWh each year. , says Jānis Kalējs, Head of Wholesale Energy Transactions of AS “Latvenergo”.
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When describing the reliability of “Latvenergo” supplies, it should be recalled that a year ago, when there was a great tension in the world markets with natural gas supplies, “Latvenergo” was able to provide resources both for its own production needs for the winter season, for the needs of customers, and also for the security of the state’s reserve gas supply.
In order to obtain resource sufficiency in the long term both for the continuity of electricity production processes in Latvenergo’s thermal power plants and for end consumers, “Latvenergo” has concluded a long-term usage agreement with the Klaipėda liquefied natural gas terminal, which guarantees the possibility of importing natural gas through the terminal in the amount of up to 6 TWh annually for the next 10 years.
Similar to previous years, this year too “Latvenergo” is one of the largest users of Inčukalna underground gas storage (IPGK), which in combination with regular natural gas deliveries through the Klaipėda terminal allows to supply with sufficient natural gas reserves for the next heating season.
According to “Gas Infrastructure Europe” data, the filling of IPGK on August 13, 2023 was 17.24 TWh or 76% of the available storage volume, which is about a third higher than a year ago on the same date (respectively 12 TWh or 50%). The current rate of storage injection shows that at the end of the injection season, the amount of natural gas in the storage will be very close to its technical capacity, and a large part of it will also be made up of Latvenergo’s natural gas reserves.
When characterizing the natural gas market and prices, it should be recognized that the prices of this resource, both globally and in the European region, are still very volatile, and any minor factors can affect the volumes of natural gas supplies or changes in consumption, which are also immediately reflected in prices, as they change by several percent during the day, both up and down.
So, for example, news of a potential strike by workers at Australian gas extraction sites in the second week of August caused a rise in natural gas prices on the Dutch TTF exchange by approximately 8 EUR/MWh or 29%.
Despite this, the summer natural gas price level is relatively lower, and this is largely due to the decrease in global natural gas demand, as well as the high level of European storage, which is currently around 90%.
Many market analysts predict that the maximum filling of European storages will probably be reached before the end of the pumping season. As the European storages are filling up, it can be observed that European natural gas traders, thanks to the developed transmission infrastructure, are also starting to use the storages in Ukraine to create the largest possible reserves for the next winter.
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The expert emphasizes that the demand for natural gas in Asia, which globally competes with Europe for liquefied natural gas, has not yet returned to the level of previous years.
On the other hand, the winter natural gas price forecasts remain higher than the current natural gas prices. This is due to the fact that it is possible to provide only about 30%-40% of the winter consumption in European storages, and this means that a rather large amount of natural gas needs to be provided by direct deliveries.
It is relatively calmer in the Baltics, where, using the technical capacity of IPGK, it is possible to provide gas supply for the entire heating season from storage. Although European powers such as Germany have been able to successfully replace natural gas pipeline supplies from Russia by diligently building LNG terminals, there are still some concerns about whether this will be enough to meet winter consumption. This is also a factor that keeps winter gas prices higher than what we currently see in the summer.
2023-08-22 11:39:44
#natural #gas #winter #customers #Latvenergo
