BAKU, Azerbaijan, March 2
By Leman Zeynalova – Trend:
Europe needs additional infrastructure to boost liquified natural gas (LNG) imports, Trend reports citing the Independent Commodity Intelligence Services (ICIS).
ICIS says in its latest report that European LNG imports reached a record high in January 2022 and could go a little higher if Russian pipeline gas supply falls, or even stops completely.
“For LNG to take a much greater structural share of the European gas mix, additional import infrastructure is likely required, such as the renewed plans for German import terminals. Expansion of existing LNG terminals is another option. The Dutch Gate and Belgian Zeebrugge terminals are to be expanded by 2024 and the Polish terminal in 2023. But neither of these options gives an immediate solution to any major shortage of gas and more capacity does not necessarily lead to more supply. Much of the LNG into Europe is supplied on a flexible basis and will flow to other parts of the world unless European prices are attractive,” reads the report.
The report says that on the surface, there is plenty of capacity available to bring more LNG into Europe.
‘European LNG terminal utilisation, excluding Turkey, stands at 67 percent over the year to date, according to ICIS LNG Edge. While this is well below maximum rates, it is strongly up from the last 12-month average of 49 percent. With lower Russian pipe gas in recent months, and high European gas prices, more LNG has come to European terminals, especially from the US. Total operational European LNG import capacity stands at just over 156mtpa, which equals 13m tonnes/month – almost 3.5m tonnes or 36 percent more than was delivered in January. A 100 percent LNG terminal utilisation figure would have taken LNG’s share to 40 percent of the January European gas supply mix, if other supply remained unchanged,” ICIS analysts note.
In other words, the company notes that even at maximum levels, it would not come close to replacing Russia’s pipe gas share.
“But 100 percent utilisation will never be achieved. Several key import terminals in northwest Europe have already been running at maximum rates so far this year. These include the Dutch Gate, French Montoir, Belgian Zeebrugge and UK Dragon terminals, according to ICIS LNG Edge data. Those that could bring in more LNG are in many cases not well connected to the broader European gas market, which would limit the benefit of additional LNG imports. Five of the terminals with the lowest utilisation this year are in Spain, which has the largest LNG import capacity in Europe. Spain can only export pipeline gas to France. The maximum daily flow rate from Spain to France is 20 million cubic metres, which is typically about the daily maximum sendout from just one LNG terminal. So Spanish LNG does not have a major route into the higher gas demand centres of northwest Europe. Spain could, however, hold more LNG in tank which could then be reloaded and taken to other terminals in Europe.”
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