Eesti Gaas to reduce prices by 30 percent from February

An LNG tanker vessel arriving at Klaipeda, Lithuania this year.
An LNG tanker vessel arriving at Klaipeda, Lithuania this year. Source: Eesti Gaas

Eesti Gaas, the primary supplier of natural gas in Estonia, is to reduce its prices by 30 percent from February, following news earlier this week that the international natural gas price level had dipped below the €80-per-Megawatt-hour mark

From February, natural gas will cost €1.25 per cubic meter, Eesti Gaas says, a fall of 30 percent on the current price level of €1.75 per cubic meter (both prices are inclusive of VAT, and refer to the flexible package to domestic consumers).

In October and November, the price was €2.85 per cubic meter.

Raul Kotov, Eesti Gaas board member, said: "Europe has been stocking up its reserve tanks over fears of a gas shortage, and these reserves are significantly larger than this time of year, in previous years."

"At the same time, the tanks are emptying more slowly due to the mild weather and drive to save on energy coss, which has also reduced demand, and brought down the price on the world market."

Kotov and Eesti Gaas had said earlier in the week that while the Netherlands-based Title Transfer Facility (TTF) price had dropped to €80 per MWh, then lower, since Eesti Gaas makes its purchases on a month-ahead price basis, the TTF fall will not translate to lower prices to consumers until February.

January's price will remain the same as December's, in other words, for Eesti Gaas consumers.

The €80-per-MWh level was also significant in that it is the cut-off point below which state support for gas bill payments does not apply.

The state has since the start of heating season in October been providing 80 percent of the cost of that component of a gas bill which exceeds €80 per MWh (or €0.7744 per cubic meter), with a consumption capped place based on average household volumes used.

Consumers can still consume more gas than the cap, just that support payments, which run to the end of March, will not apply to that excess.

Kotov added Friday that whether this trend for a fall -from €300 per MWh in late summer, to  €130 per MWh in mid-December, to €100 midway through last week and on down to the current levels – depends on the same factors which caused the fall, ie. weather and demand, across Europe.

In Estonia alone, preparations have been made for any rise in consumption (eg. if it gets colder), guaranteed by secured Liquefied Natural Gas (LNG) supplies for the rest of winter.

In short, fears over a general European gas shortage due to the need to decouple from Russian supplies have not materialized, for this winter at least, while Estonia's new LNG terminal at Paldiski and an equivalent facility at Inkoo, Finland, will mean the country's annual consumption of 5TWh is secure.

The state also has 1TWh natural gas in reserve – not necessarily in Estonia itself, but at Incukalns in Lativa, which has subterranean storage facilities.

Estonia also has access to the LNG terminal at Klaipeda, Lithuania, and has had re-gassified LNG delivered from that location, taken from five vessels which sailed from the U.S. and from Norway through the summer and autumn.


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Editor: Andrew Whyte, Barbara Oja

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