LNG regasification capacity could reach 250 mta over the next decade, with seven new countries becoming first-time LNG importers
Based on currently operating, proposed and under construction LNG infrastructure, European LNG import capacity could reach 250 mta by 2030, according to analysts at Global Energy Monitor (GEM). In its report Gas Bubble, Tracking Global LNG Infrastructure, data showed growth of more than 40% over current capacity of 172.7 mta (including Turkey).
LNG import terminals under construction in Croatia and Cyprus will make those countries first-time LNG importers, while pre-construction activity in Estonia, Germany, Ireland, Latvia and Romania would swell the ranks by another five countries. Overall, there are 24 LNG import terminals proposed or under construction in EU members states.
Clouding the picture further is the current demand destruction caused by the lockdowns related to the Covid-19 pandemic and low gas prices resulting from oversupply. Some of these projects will face headwinds, pointed out GEM.
Croatia will become a first-time importer of LNG when the Krk project is commissioned in 2021, Based on a floating storage and regasification unit (FSRU), the terminal will have a capacity of 1.9 mta of LNG. GEM, however, pointed out in its report that opponents of the project “are focusing on the damage it would do to the ecologically sensitive Krk Bay, and challenging public funding for the project in the form of €101.4M (US$119.4M) from the EU and €100M (US$117.7M) from the Croatian government.”
In June, €150M (US$176.5M) in funding was approved by the European Investment Bank (EIB) for the development of an FSRU-based LNG import terminal in Vasilikos Bay in Cyprus. Meant to lessen the island nation’s dependence on heavy fuel oil and petroleum products for power generation, the LNG import terminal will supply gas to EAC’s Vasilikos Power Station.
The European Union’s Connecting Europe Facility is providing a €101M (US$119M) grant to the Natural Gas Infrastructure Company of Cyprus (ETYFA), which is owned by Natural Gas Public Company of Cyprus (DEFA) and the Electricity Authority of Cyprus (EAC).
Germany’s carbon neutral future
One of Europe’s largest power suppliers, Germany’s Uniper SE, is aiming to reduce its annual carbon emissions from 22M tonnes annually to net-zero by 2035, with investments in LNG and natural gas central to the company’s strategy.
Speaking at Uniper SE’s annual general meeting in May, Uniper SE chief executive Andreas Schierenbeck highlighted the five core elements of the company’s carbon neutral plans.
“We’re convinced that gas, which has the lowest specific carbon emissions of any fossil fuel, will play an important role in a low-carbon energy world,” said Mr Schierenbeck. “Gas is also the ideal partner for intermittent renewables that fluctuate with the weather. Alongside the conversion of power plants to gas, gas imports are crucial, especially considering the decline in Europe’s natural gas production.”
Uniper’s net-zero strategy centers around exiting coal, expanding its natural gas business, investing in renewables, fostering ‘green’ hydrogen innovation and increasing energy efficiency.
Two investments underpinning the company’s strategy are the Nord Stream 2 pipeline and an LNG import terminal at the German deepwater port of Wilhelmshaven.
Over 90% complete, the Nord Stream 2 pipeline project would bring 55 billion cubic metres (bcm) of gas directly from Russia across the Baltic to Germany. However, the project has hit a political roadblock thrown up by US lawmakers, who have imposed targeted sanctions on any vessels being used to complete the pipeline in legislation signed into law in the National Defense Authorisation Act of 2020 (NDAA).
In December 2019, shortly before President Trump signed the NDAA into law, Texas Senator Ted Cruz and Wisconsin Senator Ron Johnson sent a letter to the chief executive of Allseas Group warning the company it would face sanctions if it continued installing deepsea pipes for the Nord Stream 2 project.
“Gas is the ideal partner for intermittent renewables”
In anticipation of enactment of NDAA, Allseas suspended its Nord Stream 2 pipelay activities in December.
Switzerland-based Allseas had deployed its construction vessel Pioneering Spirit, pipelay vessels Solitaire, Audacia and Calamity Jane, construction vessel Fortitude and Oceanic in support of its pipeline installation work on the Nord Stream 2 project.
To further drive home the point, US Secretary of State Mike Pompeo told senators during a hearing in July: “We’ll do everything we can to make sure that pipeline doesn’t threaten Europe. We want Europe to have real, secure, stable, safe energy resources that cannot be turned off in the event Russia wants to.”
Expectations are that Gazprom will try to complete the project with its own resources, including the pipelaying vessel Akademik Cherskiy. MarineTraffic.com reported the Russian-flag vessel had docked at Port Mukran on the Baltic Sea in Germany.
Nord Stream 2 is being constructed alongside the Nord Stream 1 pipeline, in operation since 2011. If completed, Nord Stream 2 would double the Nord Stream system’s total capacity. It is owned entirely by Gazprom, with 50% of its financing being supported by five European energy companies. Besides Uniper, financing is being provided by France’s Engie, Austria’s OMV, Anglo Dutch Shell and Germany’s Wintershall.
Although the EU has an ambitious energy diversification strategy, Russian gas is still a critical energy source, accounting for 46% of EU imports in 2018.
While Nord Stream 2 has been slowed, progress is being made on an LNG import terminal in Wilhelmshaven. A subsidiary of Uniper SE and Japan’s Mitsui OSK Lines Ltd (MOL) has signed a contract to build and charter a 263,000-m3 FSRU for a planned terminal moored at the deepwater port of Wilhelmshaven in the North Sea.
Uniper SE subsidiary LNG Terminal Wilhelmshaven is the project developer and operator behind the new LNG import terminal.
South Korean shipbuilder Daewoo Shipbuilding and Marine Engineering (DSME) will build the FSRU, which will be chartered by LNG Terminal Wilhelmshaven for 20 years.
Expanding the value chain
“Gas is needed to decarbonise all sectors of the economy,” said Mr Schireneck. This includes the heavy vehicle sector where company subsidiary LIQVIS is building and operating LNG filling stations for trucks.
Uniper SE also inked a Memorandum of Understanding (MOU) last year with Dutch LNG supplier Titan LNG to promote the use of LNG as a fuel for German industrial, road and shipping customers. The LNG import terminal in Wilhelmshaven will be able to load small LNG seagoing vessels and barges. Additionally, several tanker trucks will be able to load at several loading bays to transport LNG by road.
Logistics companies can receive subsidies from the German government and operate toll-free on German roads if they employ LNG-powered trucks.
“We want Europe to have real, secure, stable, safe energy resources that cannot be turned off [by] Russia”
With its own plans for carbon neutrality by 2040, German electric utility company RWE signed an MOU with German LNG Terminal GmbH in June to develop green hydrogen produced with renewable energy. The hydrogen would be available at a planned LNG terminal in Brunsbüttel on the Elbe River in northern Germany.
German LNG Terminal managing director Rolf Brouwer said: “Hydrogen produced from renewable energy sources is in line with Germany’s goal to become climate-neutral by 2050.”
While committed to LNG, RWE Supply & Trading global head of LNG Javier Moret, explained that the company wanted to be “prepared for the next technological advancement. In the future, hydrogen will play a key role as a climate-neutral fuel in the energy mix.”
Existing pipelines that will be connected to the terminal would be suitable for the distribution of hydrogen locally, said the company.
RWE and German LNG expect to finalise fully binding legal contracts for LNG imports by the end of 2020.
Active LNG market in Italy
Behind Germany as Europe’s second largest natural gas importer, Italy has three LNG import terminals. Snam holds interests in all three of the country’s LNG import terminals, including Italy’s oldest LNG import terminal, Panigaglia LNG terminal, which has a regasification capacity of 3.5Bn m3 per year.
Located 14 km offshore of Porto Levante in the northern Adriatic, Adriatic LNG marked a milestone in June, receiving its first LNG cargo from a Q-Flex LNG carrier, following testing in 2019 to accommodate the larger gas carriers.
Loading at Ras Laffran, the Qatargas-chartered LNG carrier Tembek, with a capacity of 217,000 m3, delivered its cargo to the Adriatic LNG terminal in June.
The world’s first offshore gravity-based LNG regasification terminal, Adriatic LNG is operated by ExxonMobil (70%), Qatar Terminal Ltd. (23%), a subsidiary of Qatar Petroleum, and Snam (7%).
With an annual regasification capacity of 8Bn m3 of LNG (equal to half the total Italian LNG import capacity), the terminal currently supplies over 10% of Italy’s natural gas requirements.
Adriatic LNG reported record activity in 2019, receiving 88 LNG carriers, up 11 year-on-year (y-o-y), and 7.6Bn m3 of natural gas, a jump of 1.1Bn m3 compared to 2018, representing a 95.6% utilisation rate of the terminal’s maximum regasification capacity.
The uptick in activity at the terminal reflected a recovery of Italian gas consumption in 2019: total countrywide annual volumes amounted to 73.8Bn m3, increasing 2.3% compared with 2018, driven by the power generation sector.
Italian FSRU allocates over 100% of capacity
Italy’s third import facility, the FSRU Toscana terminal, reported strong interest in auctions for annual and multi-year allocations despite the current economic downturn caused by the Covid-19 pandemic, according to operator OLT Offshore LNG Toscana.
OLT Offshore Toscana said introducing multi-year auctions resulted in strong interest from users, reflected in the positive results for the gas years (Gas Year 2021/2022).
During the auctions held from 1 to 3 July, 26 slots were allocated, respectively 22 for the Gas Year 2020/2021 and 4 for the Gas Year 2021/2022.
Overall, with the latest auctions, 45 slots have been allocated for the current and near-term Gas Years as follows: 25 slots for the GY 2020/2021; 12 slots for the GY 2021/2022; and eight slots for the GY 2022/2023.
OLT Offshore LNG Toscana owns and manages the FSRU Toscana. The terminal, moored about 22 km off the coast between Livorno and Pisa, is connected to Italy’s national grid through a 36.5 km-long pipeline, operated and managed by Snam Rete Gas. FSRU Toscana has a maximum authorised regasification capacity of 3.75 Bn m3 a year, about 5% of Italy’s national natural gas demand.