Eesti Gaas may be able to lower prices from December

Raul Kotov.
Raul Kotov. Source: Siim Lõvi /ERR

According to Raul Kotov, a member of the management board of Eesti Gaas, the company may be able to lower its prices for domestic customers from December. However, this will only happen if gas prices stabilize and Eesti Gaas plans to start offering customers fixed-price packages again in the coming weeks.

In October and November, Eesti Gaas will offer its domestic consumers gas at a price of €2.85 per cubic meter (including VAT).

At the time the announcement was made, the market price of gas was €184/MWh, based on the Dutch TTF natural gas price index. It has now fallen to around €115/MWh. If prices continue to fall, the benefits could be felt by Estonian consumers in December.

"We will certainly monitor what the gas price does on the exchanges. The current (rate of) €115/MWh is actually the price going into November. Our expected base price for November could come in at around €145-150/MWh," Kotov told ERR.

"Today we looked at the winter forecast, which showed €145-150/MWh until spring. If the prices really turn out like that, then yes, we will lower (ours). If, in any case, it is also reasonable for us to offer gas to our customers at that price, then we will do it," Kotov said.

Eesti Gaas plans to announce its December price to customers at the end of October. "It will be clear what the expectations are as of that day," said Kotov.

"As of today, future transactions, for 2023, are currently at the level of €145-150/MWh. After that they will start to fall. What actually happens will depend on what the weather is like in winter. If it's warm in Europe right now, there will be little demand for gas, there will be no consumption and gas prices will fall. If we look at it country by country, in Spain, which has the best supply, gas is twice as cheap as in, say, Germany or the Netherlands," Kotov said.

"If there is a sudden cold snap, say 25 degrees below zero, the situation could change. However, at the moment, there is instead a slight sense of optimism," he added.

China's demand for LNG (Liquified natural gas), which is currently falling, also has an impact on European gas prices. According to Kotov, this could be a good thing for customers in Europe.

Eesti Gaas stopped selling fixed-price gas packages in September, leaving its customers with a choice between an exchange package and a flexible package.

However, according to Kotov, the company may bring back fixed packages in the near future.

"Now we are in a position where we hope to be able to start offering fixed price (packages) again from next week. If the price level has come down a bit, the effect could be positive. It's really bad when you fix the price at a high level and then it actually turns out that prices start falling," Kotov said. "Our flexible package is also likely to get cheaper from December."

According to Kotov, Eesti Gaas had wanted to lease an LNG carrier at the Klaipeda terminal auction for six months, but was only able to secure one.

"We also took part in Klaipeda's 10-year auction, where unfortunately we did not get any slots, or time to unload a ship," Kotov said.

A longer contract, of 10 years for instance, would have made it possible for Eesti Gaas buy gas at a lower price.

As it is connected to the exchange price. the price at which gas will reach the Klaipeda terminal next year is not yet clear. "We have the time for the ship, we are now going to start the procurement for the ship and the gas," Kotov said.


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Editor: Michael Cole

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