London, 23 October (Argus) — Aggregate gas reserves across Spain’s underground storage facilities and LNG tanks are at a five-year low for this time of year ahead of the start of the heating season.
Combining underground storage facilities and LNG tanks, Spain had 46.1TWh in gas reserves on Wednesday. This is below 49.7TWh a year earlier and an average of 51.5TWh in 2022-24. Total reserves have not been so low for this date since 22 October 2020 when stocks were 44TWh.
Within this aggregate figure, there was 30.6TWh — or 83pc of capacity — in underground storage facilities, down from 35.1TWh — or 96pc of capacity — a year earlier and a three-year average of 34.8TWh, the equivalent of 95pc of capacity. And LNG tanks contained 15.6TWh — or 63pc of capacity — up from 14.6TWh — or 59pc of capacity — a year earlier but well below an average of 17.4TWh in 2022-24, the equivalent of 70pc of capacity.
And while there is considerably more gas in underground storage than in LNG tanks, nearly 26TWh of the 36.7TWh capacity of underground facilities is kept as a strategic reserve to be used only in emergency scenarios. This leaves 4.6TWh commercially available.
The year-on-year decrease in stocks held in underground storage facilities drove the Spanish ecological transition ministry Miteco to update LNG winter storage regulations earlier this month. The ministry increased the number of required LNG reserve days in the January-February peak demand period owing to expectations of depleted underground storage sites increasing reliance on LNG at the tail-end of winter.
But strong regasification of LNG over September and October so far has considerably weakened the typical LNG stockbuild at this time of year in preparation for progressively boosting sendout in the heating season. LNG is a crucial consideration for aggregate gas reserves in Spain given the country’s 22.9TWh of operating LNG storage capacity is the largest in Europe, in contrast to its limited underground storage facilities and pipeline interconnections with the rest of Europe.
Firms injected 35 /d into LNG tanks over September-October 2022-24. But this year there had been net withdrawals of 7 /d on 1 September-21 October before the 174,000m³ Flex Amber unloaded a cargo from Cameroon at the Sagunto terminal on Wednesday, with net injections at 883GWh that day. LNG inventories reached 49.3pc on 10 October, the lowest stocks in October since 2020.
A combination of Algerian pipeline maintenance in the second half of September, strong domestic demand and brisk exports to France owing to ongoing strikes at French LNG terminals has culminated in seasonally high sendout in Spain over the past six weeks.
Planned maintenance on the Medgaz pipeline, which takes Algerian gas to Spain, cut deliveries at the Almeria point to 169 /d on 16-30 September from 321 /d on 1-15 September. As a result, regasification stepped up to 711 /d on 16-30 September from 420 /d on 1-15 September, well above the three-year average of 604 /d in the latter half of the month.
But while Algerian flows of 322 /d stepped up on 1-22 October, stronger domestic demand on the year and a switch to net exports via the Pirineos point to France have maintained the need for higher sendout in October. Regasification was 680 /d so far this month, up from 546 /d on the same dates in 2022-24.
There may be little scope for LNG deliveries over the rest of the month to meet sendout demand, assuming the rate of regasification continues apace.
Four vessels had declared for arrival at Spanish terminals over the rest of the month as of today, delivering 643,000m³ of LNG, the equivalent to roughly 4.4TWh. Assuming the 680 /d rate of sendout continues over the rest of the month, aggregating 6.1TWh, these unloadings would not be sufficient to meet regasification demand and LNG inventories will be further depleted as November begins.
And the current discount held by PVB prompt and near-curve prices to the TTF and other northwest European hubs indicate little incentive for shippers to direct cargoes to Spanish terminals over the rest of the year. The PVB-TTF November basis market closed at -€/MWh on Wednesday, while the PVB December contract was €/MWh below the TTF at the same time.
By Iris Petrillo
