Dozens of ships liquefied natural gas (LNG) carriers were
reported to be circling off the coasts of Spain and other European countries
unable to secure slots to unload .
The plants that convert the seaborne fuel back to gas are
reported to be at capacity.
Europe has had to find alternative energy supplies over
recent months as a result of Russia progressively cutting gas flows to mainland
Europe.
One major alternative has been the importing of LNG from
distant shores, but the arrival of multiple cargoes of the superchilled fuel
has thrown up another problem; Europe has too little regasification capacity.
There were reported to be more than 35 LNG vessels circling
off Spain and around the Mediterranean. At least eight vessels early last week
were said to be anchored off the Bay of Cadiz, south-western Spain.
Spain had been able to offer just six slots at its
regasification terminals for cargoes last week. The country has six terminals
in total.
The shortage of regasification plants, or pipelines
connecting countries that have those facilities to other European markets,
means that the LNG floating offshore, imported at significant cost in preparation
for what could be a hard winter for Europe energy-wise, cannot be used.
The bottlenecks have been compounded by lower industrial
demand as Europe’s economy slows as well as lower-than-expected domestic
consumption in Spain due to unseasonably warm weather.
Another reason for the congestion could be that prices were
expected to rise as the colder weather kicked in and heating demand increased.
Some ships might be waiting to sell their cargoes at a higher price that can
offset the extra shipping costs incurred by sitting offshore.
There were fears that if the backlog was not cleared soon
then some ships might head for Asia, filling an expected gap in supply as a
result from China’s recent decision to halt LNG sales to foreign buyers to
ensure domestic supply.
Spain has the biggest regasification capacity in the EU, with
its six plants accounting for 33% of all LNG and 44% of LNG storage capacity.
Spain’s gas tanks were 80% full on average, close to
their technical limit, according to recent data from Enagas, Spain’s national
gas grid operator.
A lack of pipeline infrastructure means that this gas
cannot be transported to other European countries, so it is good news for
Spanish energy requirements this winter, but not so good for Germany.
