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Europe’s crowded LNG terminals have limited space for more gas

Europe’s crowded LNG terminals have limited space for more gas

Europe’s liquefied natural gas (LNG) terminals have limited capacity to absorb additional supply from the United States or other major producers should Russia cut off gas supplies if it invades Ukraine.

Fears have grown in recent days that Russia, which supplies about a third of Europe’s gas, is preparing to invade Ukraine, which could disrupt gas flows to Europe. Russia has repeatedly denied that it is preparing to invade Ukraine.

The US government has recently contacted major energy producers such as Qatar and Japan to see if they could send more LNG to Europe.

At least half of US LNG shipments this month have gone to Europe, according to Refinitiv data, and Europe is set to remain the top destination for US shipments for the third month in a row.

LNG imports from the mainland remain strong. After reaching a record in January, with more than 16,000 million cubic meters (bcm), so far in February they stand at 6.9 bcm.

This means that most of Europe’s LNG terminals are running at full capacity, especially in northwestern Europe, which feed big economies like Germany, France and the UK, raising the question of how much more LNG can be processed.

“Some shipments could reach other countries, but not a significant supply,” said Kaushal Ramesh, an analyst at Rystad Energy, adding that logistical problems will likely “re-open a hole in buyers’ pockets”.

LNG must be regasified, turning it into gas from its frozen state, and then transported through pipelines, either directly for combustion or to electricity generation plants.

Spain has the largest capacity on the continent, with six terminals, while Germany has none. The utilization rate of Spanish terminals was just 45% in January, according to data and analytics company Kpler.

“Spain’s problem is that its pipeline connections with the rest of Europe are limited, as there is only one pipeline that can take gas from Spain to France, so capacity is somewhat restricted,” said Laura Page, an analyst of Kpler LNG.

A European gas sector source said Iberian infrastructure could play a role.

“If there is a lack of gas for heating and, above all, for industry, the hypothesis of using the Iberian Peninsula could be tested. But, it will not be enough,” the source said, adding that parking LNG carriers on the Iberian Peninsula could also be an option.

“In (the Portuguese port of) Sines, maybe we can try to have a few more methane vessels than today, but not many more because it is almost at full capacity.”

Source: Gestion

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