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Russian gas flows resume into Latvia following July 30 suspension: data

Highlights

Flows at Korneti entry point restarted on Aug 5

Gazprom suspended gas flows to Latvia on July 30

Latvia to ban Russian gas imports from 2023

  • Author
  • Stuart Elliott
  • Editor
  • Aastha Agnihotri
  • Commodity
  • LNG Natural Gas
  • Topic
  • Europe Energy Price Crisis War in Ukraine

Gas flows into Latvia at the Korneti entry point on the border with Russia have resumed, data from Latvia's gas grid operator Conexus Baltic Grid showed.

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The data showed deliveries resuming on Aug. 5, a week after Russia's state-controlled Gazprom said it had suspended supplies to Latvia due to an unspecified contractual violation.

There have now been four consecutive days of gas deliveries at Korneti, with supplies on Aug. 8 totaling almost 44,000 MWh (4 million cu m).

Deliveries had been zero from July 30 until Aug. 4, in line with Gazprom's statement on supplies being suspended.

It remains unclear under what conditions the flows resumed.

Neither Gazprom nor Latvian gas company Latvijas Gaze could be reached for comment by S&P Global Commodity Insights on Aug. 9, while a Conexus Baltic Grid spokesperson only confirmed the resumption of deliveries on Aug. 5.

Russian flows to Latvia had already been erratic. They had been zero from July 7-20 before restarting on July 21 until July 29.

Latvijas Gaze had said on July 29 it was making payments for gas in euros "in accordance with the requirements of the regulatory framework in force in Latvia."

It also noted that it was not the only trader in the Baltic region that purchased gas from Russia and that Latvia had banned Russian gas imports starting from 2023.

In its short statement on July 30, Gazprom said: "Today, Gazprom stopped its gas supplies to Latvia specified in the July request due to a violation of the conditions established for gas withdrawal."

It is unclear whether the contractual violation was related to the currency paid for the gas.

Moscow implemented a new ruble-based payment mechanism in March and Gazprom already cut off supplies to a number of European buyers over their refusal to comply with the new system.

The first companies to lose access to Russian gas due to the ruble issue were Bulgaria's Bulgargaz and Poland's PGNiG on April 27, followed by Finland's Gasum on May 21.

Deliveries were also halted on May 31 to Dutch trader GasTerra and on June 1 to Denmark's Orsted and to Shell, whose contract was for Russian gas supply into Germany.

The cut-offs and renewed uncertainty over Russian gas supplies have contributed to the recent European gas price strength.

The Dutch TTF month-ahead price reached an all-time high of Eur212.15/MWh on March 8, according to Platts assessments from S&P Global, and was last assessed at Eur192.33/MWh on Aug. 8.

Latvian market

Latvia's own gas consumption is minor at around 1.2 Bcm last year, but it is home to the key 24.1 TWh (2.3 Bcm) capacity Incukalns gas storage facility -- the only seasonal storage unit in the Baltic region.

The site is still only 54% full, according to data from Gas Infrastructure Europe, with injections usually facilitated using Russian gas imports.

Lithuania, meanwhile, is to increase the capacity of its gas interconnection with Latvia by one-third to 90 GWh/d from November to allow more gas to reach Latvia and the rest of the Baltic region.

Lithuanian grid operator Amber Grid said that as a result of the capacity expansion, market participants would be able to transport more gas to Latvia for storage and to meet demand in Latvia, Estonia, and Finland.

Lithuania plays an important part in regional supply with its LNG import terminal at Klaipeda -- operational since 2014 -- and the recently commissioned interconnection with Poland.