Construction financing contract is signed to enhance Latvia-Lithuania interconnection

The Innovation and Networks Executive Agency of the European Commission has signed a contract with Latvian natural gas storage and transmission system operator “Conexus Baltic Grid” (Conexus) and Lithuanian natural gas transmission system operator Amber Grid regarding the financing of construction works within the project Enhancement of Latvia-Lithuania gas interconnection. Total project investment reach 9.7 million euro, 5.5 million whereof are channeled to Latvia.

The European Commission, as part of Connecting Europe Facility (CEF), shall grant EU support to enhance the Latvia-Lithuania gas pipe interconnection capacity. The support shall make 50% of the project costs.

Access to Klaipeda Liquefied Gas Terminal, Latvia Inčukalns Underground Gas Storage and Poland-Lithuania gas interconnection which is planned to be launched in 2022 will be facilitated through enhancement of transmission capacity between Lithuania and Latvia. It’s envisaged that Enhancement of the Latvian – Lithuanian Interconnection project will be implemented till the end of 2023.

Zane Kotāne, Chairperson of the Board of JSC “Conexus Baltic Grid” informs: “Project for enhancement of Lithuania-Latvia interconnection capacity is important for the whole Baltic Region and Finland, and it affects several current natural gas infrastructure projects. This proves that the improvement of natural gas infrastructure doesn’t stop at the border of one country. On the contrary – it is possible to reach maximal natural gas infrastructure improvements when international projects are planned consecutively and are integrated with each other. In this case, also natural gas system users get maximum benefit. Enhancement of Lithuania – Latvia interconnection will affect the operation of Inčukalns Underground Gas Storage, Klaipeda Liquefied Gas Terminal, Poland – Lithuania interconnection, and also the future unified natural gas market which starts its work already in next January. The aim of the project is to increase the capacity of Lithuania – Latvia interconnection by 70-80% on average achieving this with improvements in the existing infrastructure.”

But Nemunas Biknius, Operations Director at Amber Grid states: “Considering the development of regional market and the planned interconnection with Poland, interconnection infrastructure between Lithuania and Latvia is extremely significant part of the total regional gas system, thus meeting better the clients’ needs. This was clearly marked also by the advantageous situation this year – gas transmission volumes from Lithuania to Latvia were on average 2.5 times larger than last year. This was facilitated also by the value of Klaipeda Liquefied Gas Terminal and synergy thereof with Inčukalns Underground Gas Storage which offered considerably more flexible services to the market members and more advantageous prices to the gas consumers.”

The feasibility of Enhancement of the Latvian – Lithuanian Interconnection project and cost-benefit analysis carried out in 2018 showed that larger capacity is needed satisfy the regional gas market demand and guarantee the security of gas supply after gas connections are built between Finland and Estonia and between Poland and Lithuania. It must be noted that the Finland – Estonia gas interconnection Balticconnector starts operation on 1 January 2020.

The works planned during the project on part of Latvia will be the reconstruction of individual stages of the main gas pipeline to increase the maximum operating pressure from 40 to 50 bars. Through investments, the capacity of gas interconnection will be increased to 130.47 GWh a day in direction to Latvia (currently 67.6 GWh a day) and to 119.5 GWh a day in the direction of Lithuania (currently 65.1 GWh a day).

The project is included in the list of EU projects of common interest, the ten-year development plan of European Network of Transmission System Operators for Gas (ENTSOG) and priority plan of National main electricity and gas transmission projects implementation.