Gas is a fuel that is used extensively in energy sector, households and industries and represents a raw material characterised by convenience of use. It is easily transported and subject to extensive world market trade.
The natural gas used in Estonia comes from Russia and Lithuania, where in 2014 a liquefied natural gas terminal was opened. In summer, the Inčukalns natural gas storage facility in Latvia, which is used to supply Estonia in winter, is filled with Russian gas. Minimum quantities of gas are imported from Russia during this period.
The shale gas revolution in North America provides interesting opportunities for developing the Estonian gas market; this and the development of technologies for the liquefaction of natural gas have materially changed the pricing models that were based on natural gas oil prices.
District heating is the main area of application for natural gas in Estonia (39% of the volume of gas consumed). An increase of natural gas prices, resulting from limited competition, have forced producers who use natural gas for production to consider the use of local renewable fuels over the last couple of years.
Estonian gas market
The Estonian gas market has been completely open since 2007; however, our gas distribution network is only connected to the gas distribution networks of Russia and Latvia. There are five companies that import natural gas, two of them are actively involved in gas import - AS Eesti Gaas and Baltic Energy Partners OÜ. In an open gas market, every consumer can choose a gas supplier for their liking and it is not important to which network they are conntected.
Until the end of 2014, there was no competition between the gas suppliers, which was hindering the market to function effectively. The situation improved in the end of 2014, when a liquefied natural gas terminal was opened in Lithuania. The situation will improve even more once gas infrastructure projects that connect the Estonian gas supply systems to the Central European gas networks (Baltic and Polish gas links) will be implemented over the coming years; this will help in using alternative supply channels to receive natural gas (additonal liquefied natural gas (LNG) terminal in Estonia).
Gas market undertakings
Transmission networks from abroad to Estonia
Gas supply is secured by a system administrator in Estonia, Elering AS, which controls 878 km of transmission networks and 37 gas distribution stations.
The Estonian gas system lacks its own compressor station and the pressure required for transmission is provided by compressor stations that form a part of the Russian transmission system or the compressor station of the underground gas storage facility in Inčukalns, Latvia. Estonia is connected to Russia through Narva and Värska, and to Latvia through Karksi.
Natural gas consumption volumes
- AS Eesti Gaas »
The largest company in the market
Gas distribution networks in Estonia
In addition, there are 25 more natural gas distribution network operators in Estonia, owning 650 km of natural gas distribution networks or 22% of the total length of natural gas distribution networks. 14% of the scope of total distribution services is covered by these networks.
Gas import does not suffer from capacity deficit; the gas networks have been dimensioned to meet much bigger demand. The capacity of the Estonian distribution network at input pressure 40 bar can reach up to 14 million cubic metres per day.
As a comparison, we can observe Latvia, where the maximum daily import capacity at the same pressure is 26.48 million cubic metres. The pressure of gas imported to Lithuania is 54 bar and the maximum imported quantity is 37.44 million cubic metres per day.
Estonian gas connections are characterised by the following daily capacities:
- Karksi-Latvia: 7 million cubic metres (at input pressure of 40 bar)
- Värska-Russia: 4 million cubic metres (at input pressure of 40 bar)
- Narva-Russia: 3 million cubic metres (at input pressure of 22 bar)
From May to October, Estonia gets its gas supplies directly from Russia, mostly using the Värska and Narva connections.
In Estonia, the gas market is regulated by the Natural Gas Act, which lays down the requirements for gas importing and transmitting undertakings, sellers, distributors and also the Estonian Competition Authority that conducts market surveillance.
Network service prices for distribution network operators
A sales margin imposed on sales to consumers for gas undertakings in a dominant position
Guidelines and methodologies for subscription charges
Standard network and sales contract terms and conditions
Quality requirements for gas supply
- Estonian Competition Authority »