Baltic Energy Market Interconnection Plan GRIP 2017

2.7 Other Influencing Market Factors

The gas markets in the Baltic region and in Central- Eastern Europe are mostly supplied with gas from the Eastern direction by means of three major transmission corridors that run through Ukraine, Belarus and the Baltic Sea. In addition, the Baltic states and Finland can import Russian gas through several smaller transmis- sion corridors. In total, the technical capacity of cross- border interconnection points from Russia to the EU Member States amounts to approx. 267bcm/y. The volume of Gazprom supplies to the European countries (including Turkey) was historically at a level of 140–150 bcm/y. Even in 2016 when the level reached 167bcm, the infrastructure to export Russian gas was used globally at about 67% capacity. Thus there was still approx. 100bcm/y of reserve technical capacity. This shows that existing technical capacities currently far exceed the volumes of gas delivered from Russia. In this context, plans to put an additional 55bcm/y capacity into operation as part of Nord Stream 2 project will have a number of negative implications for the gas markets in the Baltic Sea region and in Central-Eastern Europe. The project may well endanger the security of gas supply and, for instance, introduce competition by redirecting gas flows from the existing corridors and concentrating the bulk of sup- plies in a single one. This is likely to increase the cost of gas transportation in the region and translate into higher gas prices for the gas customers in local markets. In addition, Nord Stream 2 may well result in even higher dependency on Russian gas in the European gas market. This will negatively affect assumptions, parameters and cost-effectiveness, and thus the possibility of implementation, of infrastructure investments planned by TSOs and other project promoters. In line with EU energy policy objectives these projects, especially in the Baltic Sea region, aim to diversify gas supply sources, foster competition and better integrate individual markets. What is important from the perspective of the market players, the planned projects are generally implemented according to European aquis and the Third Energy Package in particular, so interested shippers may fully access infrastructures in a transparent manner and benefit from these new developments. The Kaliningrad region is located within the region and thus has an impact on gas supply. In the Kaliningrad region, the yearly demand for natural gas is 22–23 TWh. The gas to the region is supplied via Belarus and Lithuania by Gazprom. In 2013, the first phase of the project of the Kaliningrad underground gas storage facility (UGS) was commissioned. The capacity of the UGS might be increased in the future, since it provides a possibility of overcoming fluctuations in gas demand, reducing peak loads and providing flexibility and reliability of gas supply in the Kaliningrad region. By the end of 2017, it is planned to complete the LNG project involving FSRU. .

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BEMIP Gas Regional Investment Plan 2017