Baltic Energy Market Interconnection Plan GRIP 2017

2.4 Market Indicators, Supply and Demand

Since the infrastructure of the BEMIP region is still insufficiently interconnected, there are actually separate gas markets in Finland and in the Baltic countries with different supply and demand patterns. Not long ago Finland, Estonia, Latvia and Lithuania were fully dependent on a single gas source from Russia. However, after commissioning the Klaipėda LNG terminal in Lithuania, now only Finland depends almost entirely on natural gas supplied from Russia. Latvia presently only uses gas from Russia but it is expected that this situation will change in 2017 when the gas market opens there. Due to favourable LNG prices, Estonia already in 2015 received more than 20% of its gas from Lithuania, and if necessary, Lithuania can receive almost all of its gas needs from the terminal. In contradiction to the East-Baltic region, Polish gas is not only imported but also produced locally. In 2016, the majority of gas was imported fromRussia (112.1TWh). The share of other sources was much lower, with supplies from other EU Member States at 28.5TWh and national production injected into the transmission system amounting for 24.8TWh. 2016 marked the first year of commercial operations at the terminal in Świnoujście and the LNG supplies via the facility reached 11.2TWh. In cooperation the Polish TSO, GAZ-SYSTEM, and the Danish TSO, Energinet.dk, construction of the NO-DK-PL project (Baltic Pipe) is being planned that will provide a direct connection between Norwegian supplies and Central-Eastern Europe and the Baltic region by 2022. The capacity of the Baltic Pipe is up to 10 bcm/y and will significantly contribute to the diversification of supply and have major importance for development of the market in the region. It is also envisioned to reverse a capacity of 3 bcm/y from Poland back towards Denmark. Denmark is another country that has its own gas and hence its gas network was in- itially constructed to transport gas from the North Sea. Currently, Denmark already receives some natural gas from Germany. But with the foreseen decline in gas pro- duction in the Danish North Sea, the country will become more dependant on gas supplied from Germany, and this will impinge on its current security of supply. Sweden receives gas from Denmark via pipeline and in recent years some develop- ments have taken place in small-scale LNG terminals. In some countries, biogas is also an important source of energy, but in other BEMIP countries it is slowly picking up. Denmark, Finland and Sweden are countries where biogas already plays an important role. It is expected that biogas will become an im- portant fuel for cars in Estonia. Poland is the BEMIP country where an increase of gas demand is forecasted. The general trend in all other countries of the BEMIP region is replacement of natural gas by renewables, which is supported by the energy policies of the respective countries. The largest gas market of the region is obviously Poland with an annual gas demand that is considerably higher than all other countries combined.

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BEMIP Gas Regional Investment Plan 2017