Europe’s import terminals are expanding in preparation for even more liquefied natural gas (LNG) that’s expected to reach the continent with a second wave of U.S. export facilities coming online in the years ahead and higher forecasted output from other leading global producers.
Terminal operators, which offer regasification, storage, berthing slots to unload ships, truck loading and other services, have announced a series of expansions across the continent. Europe’s LNG imports have been steadily increasing since October 2018, and reached a new monthly record of 12.7 Bcf/d in November 2019, according to the Energy Information Administration.
National Grid plc’s Grain LNG import terminal in the United Kingdom, Europe’s largest, launched a non-binding open season last month to expand tank storage, regasification and send out capacity. The facility currently has the ability to process 14.8 million metric tons/year of LNG, or roughly 2 Bcf/d, and deliver 644 GWh/day to end-users, or a little more than 2 Bcf/d of gas, which is about 25% of total UK demand.
In addition to a modest storage tank expansion, Grain said it could upgrade existing infrastructure or build more to boost send out capacity to 800 GWh/day, or nearly 3 Bcf/d. Grain is gauging interest in the expansion through January 10 and could start taking binding bids in March 2020.
The facility is also offering primary capacity to the market beginning in 2025 following the expiration of long-term contracts that were signed around the time the facility entered service in 2005.
In fact, more capacity across Europe could be offered, according to one consultant who works in the space. European receiving terminals were granted an exemption in the late 1990s and early 2000s from market reforms implemented by the European Union that opened energy infrastructure to third-party access. Now that long-term contracts are starting to roll-off, more primary capacity could become available.
Europe has been a balancing arm for the global LNG market. But natural gas storage and LNG inventories have been near capacity for months now on a global supply glut and weaker winter weather. With supplies from the U.S. and other major exporters like Qatar, Russia and Australia forecast to increase in the coming years, there are concerns stateside that terminals could be shut-in next year if gas has nowhere to go.
But there is still a case for expanding European storage, said ClipperData’s Kaleem Asghar, director of LNG analytics. Those with terminal capacity rely on the European market and strong demand there. Buyers in the Asian market have been tough as well, Asghar told NGI.
“The portfolio players are more keen in that part of the world so that they can invest and take advantage of the arbitrage window,” Asghar said of the advantageous imbalance that occurs between LNG prices in different markets across the world. “The LNG market is now turning into a more liquid market.”
By keeping LNG in Europe, “they can sell to the South American or Latin American market too,” he added. “If they have a product available there at a lower price and they replenish their stock, then they can meet a tender in Mexico.”
In that sense, Asghar said growing terminal capacity in Europe would help global LNG players expand their market access.
Earlier this year, another key European entry point for LNG, the Gate Terminal at the Dutch port of Rotterdam, launched an open season. The facility explored expanding its annual regasification capacity from 12 billion cubic meters (Bcm) (424 Bcf) to 14 Bcm (500 Bcf). While no contracts were signed, the facility, which is jointly operated by Dutch multinational Royal Vopak and midstreamer Nederlandse Gasunie, continues to offer the capacity.
Meanwhile, in Poland, where efforts continue to reduce the country’s reliance on Russian gas imports, the Swinoujscie terminal is planning to expand its regasification capacity from 5 Bcm/year (176 Bcf) to 7.5 Bcf (265 Bcf).
Engie SA subsidiary Elengy has also gauged interest in expanding capacity at its receiving terminals in France. The company said earlier this month that its Montoir-de-Bretagne LNG terminal is now fully booked from 2023-2035. The company is also examining its options for various capacities at the Montoir-de-Bretagne facility and its Fos Cavaou LNG terminal beginning in 2030.
Existing facilities will also face new competition from the Wilhelmshaven LNG Terminal, which German utility Uniper SE plans to start operating in 2023.