Adapting to the fact that liquefied natural gas terminals have become the main sources of natural gas supply, the natural gas storage system operator has proposed to improve the Regulations on the use of the Inčukalns underground gas storage facility by introducing the regulatory framework for the natural gas injection curve. The Public Utilities Commission (hereinafter – the PUC) has announced a public consultation on the developed amendments to the regulations on the use of the storage facility until 26 January 2023.
Adapting to the new conditions, the opportunity to inject natural gas in the Inčukalns underground gas storage facility in accordance with the planned liquefied natural gas regasification time will become an important condition for successful operation of the natural gas market participants. Thus, with the planned amendments to the Regulations on the use of the Inčukalns underground gas storage facility, by introducing the regulatory framework for the natural gas injection curve, it is intended to provide the necessary flexibility to market participants, guaranteeing them the availability of natural gas injection capacity in the Inčukalns gas storage facility, to reduce the storage congestion, as well as to create preconditions for storing the largest possible amount of natural gas in the storage facility and to promote its sustainability.
Alda Ozola, the chairman of the PUC explains: “The Regulations on the use of liquefied natural gas terminals have strict deadlines for cargo receipt and regasification - the schedule is rolling, but cargo receipt and regasification mainly takes place within a calendar month. For example, if several natural gas market participants received cargo at the terminal in one month and wanted to inject the received natural gas into the storage facility, under the current Regulations it might not be possible for all at the same time and in the desired quantity - the storage facility has a certain natural gas injection capacity, which determines the amount of natural gas to be injected in the storage facility per day. Accordingly, the intended regulation of the natural gas injection curve will positively affect the ability of storage users to plan their activities and eliminate the risk associated with possible storage congestion during the injection season. Namely, the users of the storage facility will be guaranteed that in the given month they will be able to store the amount of natural gas in accordance with the booked natural gas injection curve”.
At the beginning of last year, when Russia invaded Ukraine, the geopolitical situation in Europe and around the world changed significantly, causing major changes in the operation of the natural gas market in Latvia and the entire region. The new situation in the region's natural gas market is characterized by the fact that natural gas supplies from Russia are being replaced by natural gas supplies from the liquefied natural gas terminals in Klaipeda (Lithuania) and Inkoo (Finland).
According to the developed amendments, a storage user, when booking the bundled capacity or two-year bundled capacity product, will also book the corresponding natural gas injection curve for the relevant injection month. Thus, it is ensured that when booking a constant capacity product, the storage user is guaranteed the right to use a certain natural gas injection capacity in a given injection month.
It is planned that the storage user's individual natural gas injection curve will be formed by summing up the corresponding natural gas injection curves of all auctions in which the storage user booked the bundled capacity or the two-year bundled capacity product. The natural gas injection curve determined for the first storage cycle of the capacity product will be applied to the two-year capacity product in the second storage cycle.
At the same time, it should also be taken into account that the regasification time of liquefied natural gas may also exceed the end of the calendar month. Therefore, in such a case, the amendments provide - so that the storage user does not have to book the storage capacity for another injection month, if, for example, only five days are required for natural gas injection, the storage user will be able to agree with another storage user on transfer of a storage capacity product at his disposal with the corresponding natural gas injection curves for specific gas days.
You can read more about the planned amendments in the “Public consultations” section of the PUC website. We invite you to submit proposals and comments on the draft amendments to the PUC by 26 January 2023 by emailing them to [email protected].
The PUC approves the regulations on the use of the natural gas transmission and storage system, as well as the regulations on the system use developed by the operator of the liquefied natural gas system, or the regulations on the use of natural gas storage facility for all system users and applicants who request access to the relevant system. The PUC is also entitled to make changes to these regulations.
Before issuing regulatory acts within the competence of the PUC, as well as on those issues within the competence of the PUC, on which it is necessary to obtain the opinion of the market participants of the relevant regulated industry, the PUC conducts public consultations. As part of this, the PUC publishes the prepared consultation document on its website.
Photo Credit: JSC "Conexus Baltic Grid"