Medium-term strategy

Climate neutrality is to be achieved by 2050 – an economy with net-zero greenhouse gas emissions. This objective is at the heart of the European Green Deal. All parts of society and economic sector play a role, including the gas sector with the aim of phasing out natural gas up to the extent that does not hinder the competition of the region and, at the same time, provides a maximum towards a decarbonized gas market. Gas grids and related infrastructure will play important role in achieving climate neutrality.

Russian invasion in Ukraine completely changed landscape of European natural gas industry including Latvia, which starting from 1^st of January 2023 banned Russian natural gas imports for domestic usage. These circumstances create new challenges related to natural gas import sources and reorientation of infrastructure and business processes. Therefore, aspects related to security of supply have dramatically increased their importance in both – national and regional landscapes.

Considering the major turns in the natural gas industry as well as expected changes in the regional natural gas market, it was necessary to update the strategic directions and priorities of the company. The medium-term strategy for 2023-2027 is a planning document that sets strategic goals, defines medium-term priorities and the set of measures for achievement of the goals set by Conexus, which will ensure sustainable development of the company.

For the strategic planning period Conexus has identified strategic targets in three directions:

Market development

Promote development and further integration of gas market, including promotion for growth of biomethane, hydrogen and other gaseous energy carriers' markets

Facilitate integration of the regional market
Promote cooperation with other regional TSOs to develop a unified position regarding the integration of bioga
s and hydrogen into the transmission networks, by supporting biomethane injection into transmission network
Further development of Inčukalns UGS services by securing flexibility and compression withdrawal option

Infrastructure safety and security of supply

Ensure available and secure gas transmission and storage infrastructure, at the same time researching and promoting adaptation options for injection of other gaseous energy carriers

Implement projects of common interests
Execution of R&D projects to identify technical options and necessary investments for retrofitting or repurposing existing infrastructure for blending or pure hydrogen usage, including building a dedicated hydrogen infrastructure.
Asset management based on future challenges

Sustainability

Focus on climate and environmental sustainability aspects

By focusing on sustainability, Conexus shall target its attention to environmental aspects:

E – regional market integration that supports renewable gas development, secure transmission, and storage infrastructure, while focusing on methane, NOx and other GHG emission reduction
S – safety-oriented culture, professional and development-oriented team
G – compliance with the Corporate Governance Code

Alongside strategic targets, Conexus has defined three horizontal targets closely related to all planned medium-term activities. These horizontal targets complement the strategic objectives and contribute to their implementation.

Focus on organizational development and efficiency

Conexus will facilitate funding opportunities as well as increase operational efficiency

Digitalisation and cybersecurity

Conexus will continue digitization projects focusing on operational technology, physical security, fire safety and cybersecurity

Professional and development-oriented team

Conexus’ value is professional team, therefore a development program will be made, which shall provide opportunity for employees to develop skills by creating individual development plans. The company will promote learning new skills for transformation to renewable gas technologies. Conexus shall promote transfer of skills and knowledge from experienced employees to new ones. To promote the professional development of the team, Conexus shall create a competitive and flexible remuneration system.

Stakeholder benefits from Conexus' strategic activities:

	GAS USERS	SYSTEM USERS	INVESTORS	SOCIETY	EMPLOYEES
TARGETS	Infrastructure adaptation for development or renewable gases Safe and secure supply of gas	More appealing and elastic storage products Proper and timely information on current and upcoming events and changes More capacity available at interconnection points	Profitable operations and predictable dividends Updated approach to asset management adjusted for future challenges New financing sources	Secure and reliable energy supply Reduced Conexus environmental impact according to economical and technical options Gas infrastructure adaption to renewable gases to promote state’s goals of GHG emission reduction and other environmental targets	Safe and digitally advanced workplace Professional development of employees Retaining skills and knowledge in the organization Competitive and flexible remuneration system
INDICATORS	Development of plans, regulations, etc. for promotion of renewable gases Number of incidents and gas supply interruptions	New storage products Inčukalns UGS and ELLI enhancement projects completed Public consultations on relevant topics Explanatory information and events	Net profit (EUR) Dividend pay-out ratio Asset management policy Financial instruments issued by Conexus	Emissions (CH₄, NO_x, CO₂) from technological processes Undisrupted gas flow Volume of renewable gas transported or stored in Conexus infrastructure	Health & safety indicators Training courses participation rate Digitalization and cybersecurity projects Company is able to attract necessary industry professionals
RESULTS IN 2027	No major incidents, no gas flow interruptions for end users Available infrastructure for infections, transmission and storage of biomethane Finished research on potential to inject hydrogen in the gas system	Deeper market integration Higher capacities at interconnection points Improved characteristics of storage products Compression withdrawal provided in Inčukalns UGS Less administrative burden	Fully collected allowed revenue and ROE achieved during strategy period at peers level Reviewed and updated asset management policy Dividends paid according to Dividend policy Presence in capital markets	Completed Inčukalns UGS enhancement project Secured national gas demand Availability and technical support for injection of biomethane Solar generation plant in the Inčukalns UGS Clarity on possibilities to inject hydrogen into the exciting gas infrastructure Emission of GHG and NOx reduced in technological processes according targets	Zero serious safety incidence Developed lifelong learning and competence programs and high participation rate Completed key digitalization projects Professional staff employe