Baltic States Agree on Capacity Idea

The Baltic states' gas transmission system operators (TSOs) have concurred on a so-called implicit capacity allocation model, which when implemented, will lead to the integration of the gas markets in Lithuania, Latvia and Estonia.

“The implicit capacity allocation method means that short-term cross-border transmission capacities will be allocated on the gas exchange platform simultaneously with the quantities of gas traded on the Baltic states' markets through the gas exchange,” Lithuania’s TSO Amber Grid said after signing the co-operation agreement with Latvia’s Conexus Baltic Grid and Estonia’s Elering.

The model will improve competition in the Baltic gas market and help ensure optimal prices for consumers and gas flows between the Baltic countries, says Amber Grid's chief strategist Danas Janulionis. “This would be the first step toward the integration of the Baltic gas markets," he said. The new model will be implemented by next summer.

The three countries have very small demand and rivalries have so far hindered co-operation, especially in the area of LNG imports. The import terminal in Klaipeda, Lithuania (pictured below), has not been used anything like as much as is needed in order to cover the cost of it.

(Credit: Hoegh)

The three Baltic states' prime ministers signed a declaration on the development of a single regional gas market last December. In the development process, Amber Grid and the other Baltic gas transmission system operators will coordinate the principles and rules of balancing and trade, as well as other principles and rules important for the wholesale market. A single Baltic gas market is expected to become operational in 2020. 

Linas Jegelevicius