First operating year for open gas market
The Finnish market for pipeline gas opened up to competition on January 1, 2020. Gas transmission and energy sales were unbundled. Overnight, there were a number of different alternatives available to customers for sourcing gas. At the same time, the first news began to surface about a new virus, which was subsequently to have major implications for the global economy. What has happened on the new pipeline gas market and what does the year ahead have in store?
The market opened in one go without any issues. Once it was open for competition, gas users had various procurement options to choose from. The start of the year also saw the opening of the Balticconnector pipeline, connecting the Finnish, Estonian and Latvian pipeline gas markets. From the perspective of Finnish operators, the availability of gas is on an excellent level, and it is a positive thing that gas can be imported into Finland from several different sources.
”There are now a handful of new operators on the Finnish market. The new situation also means that any gas market participant can be our competitor on an equal footing. If they wish to do so, gas consumers, too, can begin selling gas,” Ville Pesonen, Head of Energy market Services, Gasum, describes the current market.
”As expected, more operators entered the market. Our customers now have more alternatives for buying their gas. Competition is a positive thing for us. We have addressed customer satisfaction and enhanced our operations. We aim to find solutions for our customers that offer them increasingly more added value. We have continued the actions that we started even before the market opened up and have increasingly focused on them,” says Jouni Liimatta, Head of Trading, Gasum.
The customer satisfaction survey carried out at the end of the year showed that Gasum receives positive feedback especially for customer orientation and local service.
”Our contact persons are readily available, we speak the same language and have known our customers for a long time. We have been given thanks for our way of taking care of and maintaining long-standing customer relationships. We also received positive feedback for our online solutions and their constant development. Our customers are easily able to monitor their own gas consumption and place orders directly from the system,” Liimatta says.
Coronavirus slowed the pace
The COVID-19 pandemic had an enormous global impact. The first half of the year saw a sharp fall in consumption as countries began to impose restrictions. This was also reflected on the gas and energy markets.
”In industry, there were more production stoppages than usual, and this affected the demand for gas. Lower volumes were seen also on the energy markets. The power consumption of both industrial and energy customers was slightly lower than normal and this affected gas demand volumes. The coronavirus also meant slightly lower demand in industrial logistics solutions,” says Liimatta.
Demand recovered to almost pre-coronavirus levels in the second half of the year.
The turn of the year saw a positive note on the gas and energy markets, with increased demand from businesses. In Asia, demand has already recovered and risen to above pre-coronavirus levels. Small encouraging signs are also visible in Europe, and the outlook for the second half of 2021 is very positive.
”As financial support continues and vaccination programs are rolled out, consumer behavior will recover to the previous level and we might see pent-up demand, which would then spill out onto the market. Recent news on the coronavirus have contributed to expectations from the summer onwards being at quite a good level,” Liimatta notes.
New market requires better risk management
Once the market had opened up, the price of gas began to move, as expected, with the global gas market. In the earlier system, prices had been relatively stable but during the current year switched to a considerably more volatile price system. The market moves in line with global events. The challenge for customers is that it is slightly more difficult than before to predict the price of gas. This means that also risk management has grown in importance.
“We consider that gas portfolio management and risk management services will be factors that affect customers’ decisions to buy gas. This is why also we at Gasum have built up these services. They will help to enable price volatility to be eliminated and make price movements more predictable,” Liimatta says.
Risk management and portfolio management services allow customers to focus on buying energy for their business instead of comparing prices. This saves resources and enables customers to focus on the essential.