Natural gas storage service at Inčukalns storage facility significantly boosts Conexus revenues

The turnover of the unified natural gas transmission and storage system operator Conexus Baltic Grid (Conexus) in the first quarter of this year was EUR 29.7 million, which is almost twice as much as in the same period last year according to data on the company's performance in the first three months of 2024. The increase in revenues was driven by the high demand for the natural gas storage service at the Inčukalns Underground Gas Storage (UGS).

At the end of the reporting period on 31 March 2024, 11.1 TWh of natural gas (including 1.8 TWh of energy security reserves) was stored in Inčukalns UGS, which is 37% more than in the same period last year.

In the first three months of 2024, natural gas consumption for Latvian users amounted to 4.2 TWh, which is 27% more than in the same period of the previous year. The increase in natural gas consumption was due to both the climatic conditions, which were more severe in the winter months than in 2023, resulting in a higher demand for natural gas for heating than in the previous year, and the gradual decrease in the natural gas price, which allowed users to increase their consumption of natural gas. Meanwhile, the total volume of natural gas transported in Latvia in the reporting period amounted to 7.3 TWh, down by 6% compared to the same period last year.

In the first three months of 2024, Conexus ensured uninterrupted natural gas supplies to Latvia, Lithuania and Estonia. Natural gas supplies were made from Inčukalns UGS in the amount of 6.8 TWh, which is 2 times more than in the first three months last year. As the Balticconnector underwater pipeline connecting Finland and Estonia has been closed since 8 October 2023, Conexus did not participate in the supply of Finnish consumers during the reporting period. Balticconnector resumed its operations in April this year.

"The storage capacity and capabilities of Inčukalns UGS are larger than the consumption of natural gas for the needs of Latvian users. That is, the storage can store significantly more natural gas than the Latvian market needs, therefore the demand for the storage service is primarily driven by traders in the region and is positively influenced by the currently forecasted higher natural gas prices for the winter period. At the same time, security of supply, which is largely influenced by having a sufficient amount of gas stored at the end of each injection season, is also important to Conexus as a transmission system operator. That is why we are constantly thinking of ways to improve our market offering, for example, by introducing long‑term storage products," said Uldis Bariss, Chairman of the Management Board of Conexus.

During the reporting period, storage revenues and EBITDA were significantly above the corresponding period of the previous year, thus covering the decline in transmission volumes. During the reporting period, EBITDA was 2.3 higher compared to the corresponding period of 2023, reaching EUR 23.4 million, while Conexus' profit was EUR 18.3 million, an increase of 3.5 times compared to the corresponding period of the previous year.