CS LNG News Update: 9th May 2019
By CS LNG, May 10 2019 08:52AM
1. EUROPEAN LNG RELOADS ABSENT BUT NOT IMPOSSIBLE IN SUMMER
European reloads – an important flexible source of supply in recent summers – have disappeared from view this year with current forward spreads meaning the arbitrage window is not open. Europe’s location and depth of traded gas markets have supported reload activity in recent years, with more of a focus on sourcing volumes from northwest Europe than historically-favoured Spain. But the global oversupply that kicked in from late 2018 has meant the market has other supply options. The viability of reloads depends on a number of factors, including the availability of shipping. Typically, an Asian price premium of $2.00/MMBtu or more to Europe has encouraged reloads from European terminals. Asia’s premium to the Dutch TTF has collapsed in 2019 but in the last couple of weeks has edged back up to over $1/MMBtu for July. The arrival of more US LNG to the market in the coming months should mean European reloads are not needed, even if Asian prices rise further above European gas markets. But delays to US production and any cut in the availability of other Atlantic-basin supply could mean European reloads make an unlikely recovery in the event of strong Asian summer demand. Indian and Middle East markets are well placed for European reloads, although Egypt has turned from importer to exporter over the last year. Currently, the lack of LNG carriers in the Atlantic is pushing up prompt charter rates.
[Source: ICIS 08/05/2019]
CS LNG comment: But what about the poor shipowners who are banking on bumper pay days? Our advice: take what is on offer as sitting idle cost around $2-2.5m per month! How do you make a small fortune in LNG? Start with a large one!
2. GRAIN LNG PUTS 2025 CAPACITY ON OFFER
UK’s Grain LNG import terminal said that up to 8.3 mtpa of capacity and over 100 berthing slots could be made available at the terminal in 2025. Grain LNG said that the capacity on offer was a combination of newbuild and existing capacity which comes out of contract in 2025. The expansion will increase the size of the terminal to approximately 1.2 million cubic meters, the operator said in its statement. Nicola Duffin, commercial manager for Grain LNG, said, “Grain already has the largest storage tanks in Europe […]. With the expansion of Grain we will further optimize our existing assets, which means we’ll be able to be more competitive than typical new build capacity.” Grain could also benefit from proposed changes to the gas specification rules in the UK, which would significantly reduce variable costs for LNG shippers. The UK’s Wobbe Limits currently require some sources of LNG to be blended with nitrogen to meet UK gas specifications. Plans are underway to increase these limits, which could come into force by April 2020 as part of the Gas Safety Management Regulations (GSMR). Proposals call for the Wobbe Limit to be changed to 52.85 MJ/m3 – a limit that would allow all but rich LNG to enter the grid without blending. Duffin added, “LNG would be subject to lower processing and variable costs. Lower costs will make the UK a more attractive destination for LNG, which ultimately benefits UK energy consumers.” Additional services available at Grain include reloads, transshipments and a multi-bay facility for reloading road tankers, and ISO containers. A marine breakbulk facility is also planned for 2021/22. UK terminals have seen a considerable increase in utilization this winter as new global supplies have come online and the economics of moving LNG from the Atlantic to the Pacific basin have failed to stack up.
[Source: LNG World News 09/05/2019]
CS LNG comment: So will Ofgem finally reverse its decision granting South Hook and Dragon as well as IOG the waiver on third party access which was deemed absolutely necessary when the terminals were built?
3. GIBRALTAR OPENS LNG TERMINAL
Gibraltar on Monday opened a liquefied natural gas regasification terminal, moving the British territory away from diesel-fuel power, Kallanish Energy reports. The project comes as part of Gibraltar’s effort to power its homes and businesses with cleaner energy. The 80-megawatt power plant was built by Anglo-Dutch giant Shell and its fully owned subsidiary Gasnor, which is also the facility's operator. LNG cargoes will be delivered by ship twice a month and at night, to minimize disruption to the port, located on the southern coast of Spain. The facility has five storage tanks of 35,314 cubic feet capacity each. “I would like to congratulate Gibraltar on bringing its vision of a cleaner energy system to reality,” said Maarten Wetselaar, Integrated Gas & New Energies director for Shell, in a release.
[Source: Kallanish Energy 08/052019]
CS LNG comment: So, was this decided before a Brexit vote? and an 80 Mw plant is hardly huge when you consider the average luxury hotel consumes about 30Mw per day!