Baltic States, Finland Agree Plan to Integrate Gas Markets

Lithuania, Latvia, Estonia and Finland have approved an action plan for establishing a regional gas market in the Baltic region, the Lithuanian energy ministry reported on April 22.

The plan was agreed by the four countries' ministries responsible for energy, their energy regulators and their transmission system operators (TSOs) and the European Commission. Under it, the four states aim to establish general terms for gas transportation tariffs, cross-border tariff waivers and related inter-system compensation for TSOs, regional gas transmission capacity allocation and data exchange between now and 2022.

Creating a regional market will help reduce cross-border gas transportation costs, creating more favourable conditions for trade and encourage greater competition among suppliers, Lithuania's energy ministry said. The region's gas markets became more integrated physically with the launch of a pipeline between Finland and Estonia in January. Finnish state Gasum was unbundled at the start of the year.

The ministry added that Lithuania was analysing options for further integration with the Polish gas market. The two countries are due to be connected with a new link in 2021. Finland and Estonia have been connected by a two-way subsea pipeline since late last year.

When it is fully functioning, one of the side-effects of the single market will be an end to the local rivalries. For example, in recent years Estonia and Latvia have each wanted European Union funding for an LNG import terminal of their own, despite the over-capacity of the existing terminal in Lithuania.