In 2015, LNG net imports grew by 16.6 percent in Europe as demand for natural gas grew in the region, according to the international association for natural gas, Cedigaz.
As a consequence of more deliveries which were up 1.8 million tons and less reloads (down 2.68 million tons), net imports increased by 4.47 million tons up to 31.35 million tons. Except in France, where gross imports decreased from 5.07 million tons to 4.77 million tons while re-exports slightly decreased (down 0.03 million tons), and in Greece, where imports were flat at around 0.45 million tons, net imports increased everywhere because of various factors.
In the Iberian peninsula, LNG demand was boosted by higher demand for natural gas in the power sector as droughts reduced the availability of hydropower and a heatwave in the summer increased gas consumption in the power sector, Cedigaz notes in its report.
In Spain, where LNG net imports grew to 8.96 million tons in 2015, demand for natural gas for power generation increased by 18.1 percent year-on-year from January to November while hydropower output decreased by 26.5 percent year-on-year from January to October. In Portugal, net imports also grew to 1.12 million tons rising 16.2 percent.
In Italy, imports increased 31.8 percent to 4.18 million tons as Edison leveraged its 4.6 mmtpa long-term contract it has signed with Rasgas to regasify natural gas from Qatar in the Adriatic LNG terminal. The contract, which is oil-indexed, offered competitive prices compared to Italian spot prices: Qatari LNG landed price stood at $8.41/mmbtu in January and continuously declined throughout the year down to $5.17/mmbtu in October. In France, higher imports from Norway by pipeline and higher withdrawal from storages met the increased demand for natural while LNG net imports decreased.
In Northwest Europe, where gas markets are more liquids than in other parts of the region, LNG net imports grew significantly. In the United Kingdom, where the South Hook terminal received about 20 percent more LNG (all coming from Qatar), net imports grew by 12.4 percent to 9.43 million tons. Such an increase was consistent with British growing demand for natural gas in 2015, as lower than average temperatures boosted domestic demand by 14 percent year-on-year from January to September. In Belgium and in the Netherlands, net imports grew respectively by 89.7 percent to 1.86 million tons and 71.6 percent to 0.6. Belgium importers took advantage of the low oil-linked price of LNG from Qatar and could easily find a market as the output of the neighboring Groningen field decreased. In the Netherlands, 2015 saw a strong increase in the reloading business as Gate LNG terminal reloaded 28 ships, including 14 large LNG carriers and 14 small-scale carriers.
In Lithuania, the LNG terminal in Klaipeda, operated below its capacity and unloaded 0.32 million tons. In Poland, the Świnoujście LNG terminal received its commissioning cargo from Qatar in December 2015.
Spain pulled down European reloads
After collapsing in the second half of 2014, the price difference between Asian and European LNG spot prices stayed low in 2015. Thus, while UK spot price averaged $6.51/mmbtu in 2015, Japan spot price averaged $7.5/mmbtu over the same period. With such a low difference, which was even below zero in February 2015, the reloading business became mostly uneconomic. In Spain, which reloaded about 3.99 million tons in 2014, LNG re-exports dropped to 1.05 million tons in 2015. Such a fall was explained by the collapse of re-exports to Asia and Americas which dropped respectively by 80.1 percent and 75 percent year-on-year from January to November.
However, Northwest Europe countries which received more LNG in 2015 than in 2014 also reloaded more. As the market was well supplied and prices were low in Europe, the UK and the Netherlands took advantage of the low price of the LNG they imported to re-exports to more attractive markets, including the Middle East and Latin America. The Netherlands sent large reloads to Argentina, Brazil, United Arab Emirates, Mexico, Jordan, South Korea, Egypt, and India and delivered small-scale reloads to Norway and Sweden.
More gas from Qatar and Nigeria, less from Trinidad and Tobago and Algeria
As a consequence of the dropping demand in the Far East where spot prices collapsed and the lowering pressure on the global LNG market, large portfolio players diverted cargoes to closer markets where prices were also attractive. Thus, the origin of European LNG imports changed significantly in 2015 compared to the year before. Imports from Qatar, Europe’s first supplier, grew by 15 percent to 19.21 million tons and imports from Nigeria grew by 39 percent to 4.57 million tons while exports from these two countries to Asia dropped.
Norway also exported more LNG to Europe, increasing its supply from 1.72 million tons in 2014 to 2.23 million tons in 2015.
Imports from Trinidad and Tobago reduced by half to 1.07 million tons as the output from the Atlantic LNG plant declined and was rather sent to regional buyers, in North and Latin America.
LNG exports from Algeria to Europe also dropped significantly by 11.8 percent down to 6.79 million tons in 2015. It is worth noticing that most of the fall occurred in the first quarter of the year (down 40.4 percent year-on-year) because of a two-month maintenance work at the Skikda plant and that it was offset by higher exports via pipeline to Spain and Italia.