Gas market integration
The Balticconnector pipeline between Finland and Estonia interconnects the gas markets of Finland and the Baltic states and also provides a connection to the Klaipeda LNG terminal in Lithuania and the Inčukalns underground gas storage facility in Latvia.
The GIPL interconnector pipeline between Lithuania and Poland is due for completion by the end of 2021. Then, Finland will also gain a connection to the Central European gas infrastructure and new alternative sources of gas. These include the connection via the Baltic Pipe transmission pipeline being constructed between Norway, Denmark and Poland.
Aiming towards integrated gas market in Baltic Sea area
One of the objectives of the Finnish Government’s National Energy and Climate Strategy is to create a functioning, integrated regional gas market for Finland, Estonia, Latvia and Lithuania. The motive behind the integration is to improve the functioning of the gas market and to promote competition.
Since 2017, Finland and the Baltic states have been working actively towards the achievement of the gas market integration of the four countries. Established for this purpose, the Regional Gas Market Coordination Group (RGMCG) meets around four times a year. Participating in the work of RGMCG are the countries’ ministries for energy, transmission system operators and authorities supervising the energy market.
Towards deeper integration via regional tariff area
The first concrete step towards the regional gas market was taken in spring 2019 when the Finnish, Estonian and Latvian transmission system operators (TSOs) signed a Tariff-agreement under which Finland, Estonia and Latvia form a regional tariff zone from the beginning of 2020. The agreement removed cross-border transmission tariffs between the countries and harmonised the entry point tariffs on the external borders. At the same time as the regional tariff zone was formed, Estonia and Latvia formed a unified balancing area.
The coming work aims to deepen regional integration and to form a functioning, integrated gas market for Finland, Estonia, Latvia and Lithuania. The market integration will require extensive harmonisation of operating models and close cooperation between actors in the region.