Amendments are being made to the regulatory framework of the Inčukalns gas storage facility with the aim of strengthening the security of gas supply

Natural Gas

In response to the escalation of the Russia-Ukraine conflict, the Public Utilities Commission (PUC) has received a proposal from JSC Conexus Baltic Grid to amend the storage regulations. They envisage changes for storage users, transferring to the next storage cycle those natural gas stocks in the Inčukalns underground gas storage (Inčukalns UGS) which are not withdrawn until 1 May 2022.

PUC, taking into account the geopolitical situation and the fact that natural gas is a very important resource for the Latvian economy and energy sector with a significant role both in the transformation sector – electricity and thermal energy production – and for the industry, supports the received proposal and has started developing appropriate amendments to the Regulations on the Use of the Inčukalns Underground Gas Storage Facility.

In previous years, to encourage storage users to withdraw as much natural gas as possible from the Inčukalns UGS before the end of the withdrawal season by transferring stocks to the next storage cycle, the storage capacity product booked for the storage of the relevant quantity of stocks changed. Namely, in the next storage cycle, stocks were stored within a relatively more expensive stock transfer product. In PUC's opinion, in these rapidly changing and unpredictable circumstances, more emphasis should be placed on security of supply, including the availability of stocks.

The draft amendments envisage that the natural gas stocks not withdrawn by the storage users in this storage cycle (i.e. until 1 May 2022) will be transferred to the capacity products booked at auctions for the next (2022/2023) storage cycle. If a storage user does not book storage capacity products for the next storage cycle, it will be deemed to have booked the stock transfer product for the next storage cycle in the relevant quantity of stocks.

PUC intends to develop the draft amendments by 10 March 2022. This will be followed by a two-week public consultation in which natural gas market participants will be invited to participate. At the same time, PUC draws attention to the fact that the content of the amendments may be changed before the start of the public consultation on the draft amendments.