In March 2020 the average wholesale price paid by Latvian natural gas traders for gas supplies reached the lowest point since the liberalization of the market – 11.50 EUR/MWh. Compared to the price observed in March 2019, it is almost two times smaller, according to information from the Public Utilities Commission (SPRK).
Thanks to the decline of natural gas wholesale price the prices on the retail market have also declined. According to data compiled by SPRK, the average natural gas price for households declined to 16.76 EUR/MWh in Q1 2020. For legal persons the price has declined to 19.17 EUR/MWh.
Compared to Q1 2019 the price for households is 40.63% lower and the price for legal persons it is 26.24% lower.
It is expected the tariff for household-related users will be 6.7% to 10.8% lower in the second half-year of 2020.
Natural gas procurement price is mainly associated with price changes at the European natural gas exchange, such as Germany’s Gaspool, Holland’s TTF, and Belgium’s ZTP. Rapid exchange price decline contributed to the lowest price level in the past ten years, which was observed in April and May 2020.
Natural gas price decline was affected the most by reduced economic activity in China because of COVID-19, as well as warm weather in Northern Europe. As a result of this, demand for heating needs reduced rapidly. Lower demand was observed for electricity production needs. The general natural gas consumption in Latvia was 21.27% lower between November 2019 and April 2020 when compared to the same period a year prior.
The price drop and low demand for natural gas contributed to gas storage facilities filling up in Europe, including Latvia.
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