Competitive gas prices enhance demand for services of Klaipėda LNG terminal
After the thorough technical examination and maintenance works of the of the floating storage and regasification unit (FSRU), which lasted a bit longer than one month, Klaipėda LNG terminal is operating most intensively since the beginning of the year. According to Klaipėda LNG terminal the interest of the market participants in the services of the terminal is fuelled by favourable prices of natural gas emerging in the LNG markets.
The TTF index of the Western European natural gas exchange has decreased by almost a half since October last year – the prices have decreased by EUR 12/MWh and they now amount to EUR 15.77/MWh. The summer and autumn prices observed in the market of future contracts are even lower, i.e. about EUR 14/MWh, i.e. by 36% lower than the prices observed within the same period of 2018.
The competitive prices of the gas supplied from international LNG markets is determined by the fact that all LNG terminals of Western Europe work in a manner more intensive than they worked lasted year. During the first quarter, the total amount of gas they supplied reached 24 billion m3, i.e. by 23 times more than the amount supplied within the same period last year. The regasified LNG entering the market suppresses the local production and the gas imported via remote long-distance pipelines, therefore, the prices of natural gas in wholesale markets drop extremely fast, and importers having access to a great number of sources use the emerging opportunities.
The European tendencies can also be observed in the activities of Klaipėda LNG terminal. However, in February and March, the pre-planned technical checks and maintenance works were performed in the terminal. The inspections of the LNG storage vessel together with the regasification device (FSRU) corpus, equipment and storage facilities must be performed every five years as per the requirements of the DNV GL vessel class and the vessel registration state. These were the first technical maintenance works of Independence of such a scope, and they were performed in order to ensure that the inspection of the vessel is performed in Klaipėda to make it shorter. There were no serious defects identified during the technical inspection, and the inspections was performed without deviating from the plan of the scheduled works.
“After the accomplishment of the planned long-term inspection, the Klaipėda terminal renewed its activities in late March and now it is operating with huge capacity. All the terminal users have increased the amount of the capacities they order. Only in April and May we are planning to accept eight LNG cargoes delivered with ordinary and small-scale gas carriers,” claims Mindaugas Jusius, CEO of KN (AB “Klaipėdos nafta”) – the operator of oil products and liquefied natural gas terminals.
The small-scale LNG carrier Coral Anthelia which will arrive to Klaipėda in the nearest future, marks the new stage in the history of the terminal operation. So far, small-scale LNG reloading operations were focused on the export: LNG was reloaded from the terminal into small-scale LNG gas carriers, which transported the gas to small-scale LNG import terminals in Sweden, Finland and Norway. This time the LNG reloading operations will be performed from a small-scale LNG gas carrier into the storage vessel Independence.
In April, the terminal will accept one large-scale and three small-scale LNG gas carriers, which will bring the total of 158 thousand m3 of LNG. In May-June, four more small-scale LNG gas carriers, each of which will carry 10 thousand m3 of LNG, and two large-scale gas carriers with 138 thousand m3 of LNG each, will enter the terminal. The small-scale LNG gas carriers will be accepted between the large-scale LNG convention cargo.
“Seeking to provide the services of natural gas regasification and reloading meeting the highest security standards, we, together with the owner of FSRU Independence – “Hoegh LNG”, are using the innovations which enable our clients to use various possibilities emerging in the market. We not only reload the LNG into small-scale gas carriers, but, when a favourable situation emerges, accept the gas brought to Klaipėda terminal by smaller gas carriers,” Mr. Jusius.
According to him, the competitive pressure, which the globally traded LNG provides, is very important for final gas user in our region: We see that with the markets maturing suppliers use all the possibilities to provide gas for as lower prices as possible, and we, as the operators of the infrastructure, put every possible effort to provide quality services under favourable conditions and to flexibly respond to clients’ needs when adjusting schedules and finding necessary technological solutions”.
The difference between the prices of the coming summer season and winter in the markets of future agreements is more than EUR 5/MWh, and this provides grounds to believe that the number of the LNG flows in Klaipėda will grow in the future.