Gas exchange operational in Estonia from July

At the beginning of July, a gas exchange was launched in Estonia, meaning that natural gas can be traded between the Baltic States regardless of which country the gas seller or buyer is located in.

Elering, in cooperation with the transmission system operators of Latvia and Lithuania, has developed a schedule for market development, one part of which is the establishment of an exchange. The pan-Baltic gas market will be operated by UAB GET Baltic, which thus far has operated only in Lithuania and which won the competition organised by the transmission system operators of the Baltic States.

The launch of a single gas market was made possible thanks to an agreement between the system operators of the three countries to implement implicit auctions for cross-border gas transmission capacity distribution, which means that the gas price also includes transmission capacity in cross-border transactions. “For example, an Estonian market participant can purchase gas from Lithuania without having to organise gas transport from Lithuania to Latvia and from there on to Estonia himself,” noted Elering Chairman of the Board, Taavi Veskimägi.

“Elering’s positive experience in using distance transmission distribution in the electricity market, where energy and transmission capacity are traded together, has encouraged the Baltic transmission system operators to implement the distance distribution method for the first time in Europe also in connecting the gas markets,” explained Veskimägi on the reasoning behind the choice. “Elering has functioned as an electricity and gas united system operator since 2016, and has set itself the goal of working in the same way as it did with the opening up of the electricity market in order to make the gas market more open, transparent and liquid.”

The next important steps in the development of the gas market are the construction of the Balticconnector together with the strengthening of the Estonian-Latvian gas connection, and the creation of a harmonised set of rules for the establishment of a single Baltic-Finnish trading zone by 2020.

Information about transactions in the Baltic States’ single gas market is available on the GET Baltic homepage.