Integration of the gas market in the Baltic region

Integration of the gas market in the Baltic region

The Polish commodity clearing house IRGiT and the Baltic-Finnish Gas Exchange GET Baltic signed an advisory service agreement on September 16 in Vilnus, Lithuania.

The agreement was signed during a meeting of the Polish-Lithuanian Trade Chamber. The goal of the cooperation is to integrate the gas market in the Baltic region by establishing regional balancing zones. The GET Baltic Gas Exchange operates on markets in Lithuania, Latvia, Estonia and from January 2020 also in Finland and is part of a Lithuanian state-owned group of companies (EPSO-G, CEEP member). IRGiT is part of the capital group of the Polish Stock Exchange (GPW) and operates on the Polish electricity, gas, property rights and CO2 Emission Allowance market.

The project initial phase foresees the development of a risk management system as well as a collateral and clearing model by IRGiT for the GET Baltic Gas Exchange. Central to the project is the fact, that it will take into account the circumstances and characteristics of the region, which is crucial in terms of setting margins and effective procedures for closing positions and managing potential insolvency. At a later stage automated IT solution will be implemented, focusing, beside the clearing model itself, on risk management.

Integrating the gas markets of the Baltic states is an important step towards regional, and thus more interconnected, stable and secure energy systems. However, the process has to evolve on many different levels – the infrastructural, the regulative and the commercial. Poland has the ambition and potential to become a gas hub for the region with the operation of the LNG terminal and two important gas connections coming in the nearest future: with Denmark via the Baltic Pipe and with Lithuania, Latvia, Estonia and Finland via the GIPL.


Image: TGE