Interview: European LNG terminal owners looking for new ways to boost utilization

Gate LNG storage tanks, February 2017 (Photo by Jeroen Tresfon)

European liquefied natural gas (LNG) import terminal operators are constantly searching for new ways to improve capacity utilization and make it commercially viable for their customers to bring more of the chilled fuel to the continent, Stefaan Adriaens, Commercial Manager at the Dutch Gate terminal told LNG World News in an interview on Wednesday.

Despite overall natural gas demand growth in Europe in 2016, countries such as the United Kingdom, Belgium, and the Netherlands saw a decline in LNG imports as most of the fuel went to better-priced markets in Asia and the Middle East.

According to the LNG data by Gas Infrastructure Europe, utilization of the total installed capacity at the European LNG import terminals had been critically low during 2016, a trend that is continuing into this year.

The average rate of LNG terminal utilization in Europe has decreased significantly since 2010 to below 20 percent of the total send-out capacity last year, GIE data shows.

On utilization of European LNG terminals and Gate, Adriaens said that “for terminal operators booked capacity matters more than actual usage. Also one has to differentiate actual utilization rates of the jetties, storage and regasification.“

In order to keep their LNG terminals as attractive as possible, European operators have to constantly optimize utilization at their facilities and foster investments in new LNG infrastructure.

“A common theme (among European LNG terminal operators) has been to add new services constantly, we have done that, and also all other terminals have been doing that,” Adriaens said.

“New services like truck loading, small and large LNG reloads and transshipment increase the optionality of outlets and thus make it a bit more attractive to bring in LNG,” he said.

According to Adriaens, “more than two-thirds of the LNG imported into the Gate terminal left that way over 2016/17.”

Gate terminal in the port of Rotterdam, owned by Gasunie and Vopak, is one of Europe’s largest LNG terminals, with an annual regasification capacity of 12 billion cubic meters – equal to around 180 cargoes per year.

LNG throughput volumes at Gate dropped 26.1 percent to 1.7 million mt last year as compared to 2015.

“We have had only 15 ships unloading instead of 21,” Adriaens said. “On the other hand, we still did 12 large LNG reloads, whilst in 2015 we had 14,” he said, adding that reducing reloads in 2016 was planned by the terminal’s management as the pricing gap all over the globe narrowed making it less economical to ship the fuel elsewhere.

“The year turned out very different than it was anticipated, and we still see the same trend continuing so far in 2017,” Adriaens noted.

Gate has conducted 2 large LNG reloads since the beginning of this year. These volumes landed in 3 destinations, namely Spain, Malta and Turkey.

It has also loaded three smaller cargoes with previously imported LNG with final destinations being Norway and Sweden.

To further boost its reloading business, Gate “may make small investments to increase reloading rates this year,” but this is still under consideration, Adriaens said.

 

Second customer at third jetty

 

Gate added an additional jetty in 2016 which enables the loading of small volumes of LNG, from 1,000-cbm up to 20,000-cbm.

The third jetty will help boost the use of LNG as fuel for ships in northwest Europe.

Since the opening of the new facility in late August, 6 vessels in total have docked at the new jetty, according to Adriaens.

“An addition is also that we have a second customer at our third jetty, beside Shell as the launching customer.”

“The second customer started using the jetty this year,” he said without revealing the name of the company.

“Throughout the year, we expect the third jetty to be much more used particularly as we await the Shell bunkering vessel that should arrive in the second half of this year,” Adriaens said.

Shell’s LNG bunkering vessel will be based at the port of Rotterdam and will load from the new berth at Gate. It will deliver the fuel to LNG-powered ships in northwest Europe and other locations.

 

First U.S. LNG cargo to Gate?

 

Cheniere’s Sabine Pass liquefaction terminal in Louisana, the first of its kind to ship U.S. shale gas overseas, started exporting the chilled fuel in February last year.

Many predicted a “flood” of U.S. LNG to Europe but only a small number of these LNG cargoes landed in Europe, better said in the southern part of the continent.

The bulk of these cargoes went to Latin America, Africa and Asia.

However, only three liquefaction trains are currently in operation at the Sabine Pass facility and in the lower 48 states. The U.S. is expected to become the world’s third-largest LNG supplier by 2020 with an export capacity of 60 million mt coming from five terminals located along the Gulf Coast.

Talking about the possibility of a U.S. LNG cargo landing at Gate, Adriaens said that “it has not yet happened, but I understand it was a couple of times quite close in decision making… They still rather go to southern Europe than to northern Europe.”

“The moment will come, of course,” he added.

Looking forward, Adriaens said he expects more LNG coming to Europe in 2017 but this would vary throughout the year depending on many factors such as prices and demand in Asia and Latin America.

“There is a lot of LNG available… If European regas is economic, we should see a lot of it, if not – very little,” he said.

 

By Mirza Duran

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