London — Finland's gas exchange, Kaasuporssi Oy, is to close at the start of next year and all trading moved to the regional GET Baltic exchange as part of the further integration of the Finnish and Baltic gas markets, GET Baltic said Friday.
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Lithuania-based GET Baltic -- which already hosts gas trade in the Lithuanian, Latvian and Estonian market areas -- said that taking over Finnish trading from Kaasuporssi Oy would improve the integration of the regional market.
Finland and the Baltics will also be physically interconnected from 2020 with the construction of the 2.6 Bcm a year Balticconnector.
"With this agreement, GET Baltic has made another step toward the creation of a one-stop-shop for gas trading in the Finnish-Baltic gas market," GET Baltic chief business development officer Gintaras Buzkys said in a statement.
The agreement will see Finnish gas grid operator Gasum Oy close the Kaasuporssi Oy on January 1, 2020, when the Finnish gas market is opened for competition.
Simultaneously, GET Baltic will start its operation in Finland and provide the Finnish market gas exchange services in the open market.
"We expect the services GET Baltic will introduce to the Finnish market to improve cross-border trading opportunities, adding to liquidity, competition and transparency, all of which can be seen marks of a well-functioning gas market," Gasum Chief Operations Officer Janne Groonlund said.
Buzkys added that deeper wholesale market integration and liquidity concentration on one common trading platform would "enlarge the network of energy traders, regional market attractiveness and will create favorable conditions for new gas market players to enter the open Finnish gas market."
GET Baltic was launched in 2012, and traded volumes have increased sharply in recent years. Last year, a total of 1.1 TWh (104 million cu m) was bought and sold, more than double the 441 GWh in 2017.
Most of the trade was in Lithuania, which represented around 85% of the volumes. The number of active participants on the exchange hit 27 last year, up from 16 in 2017.
The exchange also publishes monthly prices for the three Baltic markets, called the Baltic Gas Spot Index. According to the latest data from July, the average traded price was Eur12.56/MWh.
GET Baltic sees the integration of the Finnish and Baltic markets as leading to more price convergence in the region.
The Balticconnector will give Finland access to gas from the Baltic region -- including regasified LNG via Lithuania and gas stored in Latvia's Incukalns gas storage site -- as an alternative to Russian pipeline gas.
Historically high Russian gas prices have contributed to a fall in Finnish gas consumption, with current consumption running at some 2 Bcm/year from a recent high of 4.1 Bcm in 2010.
Finland and the Baltic countries have been identified as being in particular need of better energy interconnections with each other and with the rest of the EU, and of greater independence from Russia.
The Baltic countries were almost entirely dependent on gas imports from Russia up until the end of 2014 when the Lithuanian floating storage and regasification unit began operations, allowing non-Russian gas into the region.
--Stuart Elliott, Stuart.Elliott@spglobal.com
--Edited by Jonathan Dart, email@example.com