Latvia. JSC Conexus Baltic Grid

The loan has been granted to finance the upgrade of the Inčukalns underground gas storage (UGS) facility and the renovation of the Inčukalns UGS-Izborsk transmission pipeline in Latvia.

Inčukalns UGS is the largest gas storage facility in the Baltic Sea region and has a strategic role in creating an effectively functioning regional gas market. Its current capacity can reach up to 2.3 billion cubic meters, enabling it to supply a third of regional gas consumption.

The investments in the storage facility include the upgrading of surface infrastructure, renewal of gas wells, modernisation of gas pumping equipment and installation of an additional compressor. The projects will increase extraction capacity and enhance security of supply. They will allow the storage facility to maintain operations despite increased gas pressure levels in the Baltic transmission networks.

The renovation of the Inčukalns UGS-Izborsk natural gas transmission pipeline entails replacing the isolation material and renewing the damaged sections, thus substantially prolonging its lifetime.

The projects are scheduled to be completed by the end of 2025. Total investment costs amount to approximately EUR 104 million.

JSC “Conexus Baltic Grid” is a unified natural gas transmission and storage system operator in Latvia. The company manages the Inčukalns underground gas storage, which is an important strategic object for the Nordic-Baltic region and one of the most modern natural gas storage facilities in Europe. Its 1188 km natural gas transmission network connects the Latvian natural gas market with Lithuania, Estonia and Russia.

Enhancement of the Inčukalns UGS facility aims to increase gas supply flexibility and daily withdrawal capacity, especially at the end of the withdrawal (heating) season. The upgrade will ensure the possibility to extract natural gas even at low storage fulfilment conditions. This will eliminate the risk of supply shortfall as well as increase the balancing capacities of storage.

Latvia, Estonia and Finland form a common gas market, and Lithuania could potentially join in the near future. The on-going regional projects – Gas Interconnection Poland–Lithuania (GIPL) and Balticconnector between Estonia and Finland – also require the gas pressure in Latvian transmission networks to be raised. The upgrades will adapt the storage facility to these developments and allow it to maintain its functionality, securing the natural gas transit within the region and accommodating the needs of a common gas market.

Impact indicators in relation to the project:

–        Capacity utilisation of the storage, %

The business of Conexus Baltic Grid and its planned investments are within natural gas transmission and storage. Transition of the business model is necessary to contribute to the achievement of the EU’s carbon neutrality target by 2050. The company has established a sustainability programme and started exploring new low-carbon business areas.

Approximately 95% of the company’s total direct CO₂ emissions (in 2019 ca. 31,900 t/a) and the majority of the NOx emissions originate from IUGS operations, whereas approximately 85% of the methane emissions are released during transmission network maintenance. The enhancement of the Inčukalns UGS is estimated to reduce the NOx emissions by 35‒90% (depending on the usage of the compressor), and the direct CO₂ emissions by approximately 23% or 7,000 tonnes annually. Conexus Baltic Grid is looking for measures to reduce the methane emissions and plans to set targets in 2021.

The company has an environmental and health and safety management system certified according to ISO 14001 and OHSAS 18001 for the IUGS operations. The existing environmental permit for Inčukalns UGS operation will be revised prior to commissioning of the new compressor. The enhancement of the gas storage facility is not estimated to have any significant negative environmental or social impacts.