Starting from 1st January 2020, the Finnish gas market will be opened for competition, in regulation with the Natural Gas Market Act, to participate in the internal market of the European Union). This Act, that entered into force in September 2018, ensures a non-discriminatory access to the Finnish market. Egssis, as a service provider, will also be active on the Finnish market, providing shippers access and the necessary software.
Natural Gas market Act
The Finnish Parliament adopted the Natural Gas Market Act on 27 June, 2017, with the purpose of opening the Finnish market for competition as soon as the Balticconnector pipeline (Finland – Estonia) is operational. It states that the transmission network, operated by Gasum, must be unbundled from the gas production and sales in accordance with a “full ownership unbundling model” by 1 January 2020.
Effects of an open Finnish market
- Market rules: when a market is opened for competition, it requires operating models and rules to create a well-working, cost-efficient gas market. The development of this market started in 2017, using several workshops to gather the views and opinions of market participants. This was led by the Ministry of Economic Affairs and Employment. The official market rules will be posted in a few weeks (spring 2019) and amended after the final feedback.
- Multiple sources: For now, Finland uses a single entry point from Russia to supply natural gas. But when the Balticconnector pipeline is complete, market participants will be able to trade gas from different sources. Furthermore, another pipeline connecting Poland and Lithuania (GIPL – Gas Interconnection Poland-Lithuania) is scheduled to be finished in 2021.
- Pricing: The current tariff structure will be fundamentally changed, as it will need to comply with the European Commission Regulation on harmonised transmission tariff structures for gas. Starting from 2020, commodity tariffs and capacity will be charged for gas transmission. Now, the size of the end user has a large impact on the price, but with the opened market the tariff for the capacity product will be based on the duration of the booked capacity. (*)
- Competition: another goal of the Finnish government is to develop a unified gas market of Estonia, Lithuania, Latvia and Finland, to boost competition. There is already an Inter-TSO-Compensation Agreement between Finland, Estonia and Latvia (signed in 2019), to create a common tariff area between the three countries. The expected result is a higher liquidity of the market, because it will be easier for shippers and traders to participate in the common tariff area.
If you are looking to participate in the Finish market as well, don’t hesitate to contact us and to use our services and software. Together with our butlers and whizzkids, we’ll guide you through the technical and operational aspects to set you up for 2020!
(*) If you’d like to consult the gas transmission tariff for 2020, published by TSO Gasum, you can follow this link.