European LNG re-exports surge while US reloads slumpTaken from: LNG World Shipping Editor's Viewpoint 14 May 2012
Europe now has six LNG import terminals capable of re-exporting cargoes; reloads at these facilities reached a record level in April 2012
While LNG re-export cargoes from European receiving terminals are currently climbing to new highs, those from US facilities are slumping.
In 2011 a total of 48 LNG cargoes worldwide were ‘reloaded’ from the storage tanks at LNG import terminals and despatched to new markets. The number was fairly evenly split between the two regions, with 19 of the re-exports originating in the US and the remainder in Europe.
The brisk pace of cargo reloading operations in Europe has continued and in April 2012 terminals in Spain, Belgium and France reported an aggregate nine re-export shipments totalling 450,000 tonnes, a new monthly record for the region. In contrast March 2012 LNG traffic statistics for the US identify just one re-export cargo from the country for the month.
Reduced demand for imported gas in Europe and the US has opened up new opportunities for gas suppliers, marketers and utilities seeking to earn some additional revenues from LNG receiving terminals that are not being fully utilised as import facilities. With relatively minor modifications to cargo-handling arrangements and the necessary permissions, an LNG import terminal can be adapted to temporarily store and then re-export cargoes for despatch to markets where the strong demand for LNG is reflected in the higher prices available.
The re-export capability enables market players to take advantage of seasonal fluctuations in gas prices, changing demand patterns and the large disparities in the price paid for gas between the principal regional markets. US and European re-export cargoes are typically sold to buyers in Asia and South America but intra-European purchases are also common.
Of the record monthly number of LNG re-export cargoes from Europe in April 2012, Spain accounted for five of the nine shipments. Gas consumption in Spain has fallen sharply over the past 18 months as a result of the reduced demand from the country’s power generation sector. Over the past seven months the opportunity has been taken to reload 27 cargoes at Spain’s Huelva, Cartagena and Murgados LNG import terminals to supply markets willing to pay a premium for the gas.
Approximately one-half of these Spanish re-export cargoes have been carried by the 35,500m3 Annabella a short distance across the Mediterranean to the Panigaglia terminal near La Spezia on behalf of Gas Natural Fenosa. Italian demand for LNG has increased in the recent past due to, amongst other things, disruptions in deliveries of pipeline gas from Russia.
Europe’s second major re-exporter of LNG is the Fluxys receiving terminal at Zeebrugge in Belgium. Zeebrugge accounted for three of Europe’s April 2012 re-export cargoes. Demand for gas in North West Europe has been weak relative to other regions this past winter and, as a result, the Belgian terminal re-exported 11 cargoes during the season. This total compares with just two Zeebrugge re-export cargoes in winter 2010-11 and five in 2009-10.
France is the latest country to join the ranks of LNG re-exporters and a reload operation at Montoir, the terminal’s first such cargo, accounted for Europe’s ninth re-export shipment in April. Two of Elengy’s French terminals, the Montoir and Fosmax facilities, have now been cleared for re-exports. Elengy reports that its service charge for the reloading of a cargo onboard a conventional size LNG carrier would be in the order of about €380,000. Such a reload would take about two days to complete and necessitate the cessation of any other LNG cargo discharging activities at the Fos terminal for a period of six days.