Madrid Dozens of ships carrying liquefied natural gas (LNG) are currently piling up off the Spanish coast. The reason: You cannot find any free terminals to unload. If the backlog isn’t cleared soon, these ships could look to alternative ports outside of Europe to offload their cargo, experts warn.
More than 35 ships loaded with LNG are adrift off Spain and in the Mediterranean Sea, traders, analysts and LNG terminal workers familiar with the situation told Reuters. Marine Traffic’s website, which tracks ship data, showed nine LNG tankers waiting in the Gulf of Cadiz alone on Tuesday.
The situation is strange: There is a shortage of gas everywhere in Europe, prices are high – but the tankers are still waiting a few kilometers from the coast.
However, it is questionable how many of them actually have Spanish ports as their destination. “In our ports, the tankers that unload liquid gas were previously given a slot for this in accordance with the regulations,” explains a spokesman for the Spanish gas network operator Enagás. According to operational reports published by Enagás, just six to eight ships per week have unloaded LNG in Spain in the past few months.
Top jobs of the day
Find the best jobs now and
be notified by email.
Enagás usually auctions the slots several months in advance. If there is current demand, new auctions will take place. This is currently not the case, however, because the storage is almost full, they say.
Spain’s storage facilities are full – and the industry has less demand
In the past few weeks, Europe has almost completely filled up its gas storage facilities to prepare for the winter. In the course of the Ukraine war, Russia had stopped its gas supplies to Europe. The EU members that have regasification plants for the conversion of LNG have therefore increasingly bought liquefied gas supplies from other countries and sometimes paid horrendous prices for them.
Full gas
93
percent
This is how high the filling level of the Spanish LNG storage is.
Enagás explained in an operational note on Monday evening that LNG cargoes may have to be rejected. The Spanish LNG warehouses are currently 93 percent full.
This is partly due to the fact that industrial demand has fallen since August. Numerous Spanish factories had shut down or reduced their production because of the high gas price.
According to the information, the high filling levels in the Spanish storage facilities would continue until at least the first week of November. “But there are only isolated delays,” the group clarified on request.
The storage facilities are also full outside of Spain, and due to the currently mild weather, the storage levels are hardly falling for the time being. LNG ships are not only waiting in front of Spain, but also in the vicinity of other European countries such as Great Britain or circling in the Mediterranean.
That may also be because some ships are waiting to sell their cargoes at a higher price ahead of the start of the heating season, said Alex Froley, LNG analyst at data analysis firm ICIS.
Spain’s gas is not coming to Europe
Spain’s ports have a third of the total LNG landing volume in Europe and account for 44 percent of the LNG storage capacity. However, Madrid can currently only use this capacity for itself because there is no potent pipeline that would connect the country to northern Europe.
Germany, Spain and Portugal are therefore pushing for a new pipeline from Spain to France so that the gas can be transported from there to northern Europe. But so far Paris has refused.
Germany does not have its own LNG terminal. In the coming winter, two floating LNG plants in Wilhelmshaven and Brunsbüttel should be ready for use to import liquid gas into the German gas network. Together they have an annual capacity of up to 12.5 billion cubic meters. Two more of these systems could be used in Stade and Lubmin, which, like the first, could later be replaced by fixed LNG terminals.
With agency material.
More: How long the gas could last for the winter, according to weather services