Spanish shippers turn to long-range storage to soak up gas

Spain’s gas system is so long that shippers are planning to inject gas into storage facilities throughout December, according to initial nominations published by Spanish gas transmission system operator (TSO) Enagas.

Under normal circumstances, Spain – like other countries – would be expected to withdraw in the period between the start of November and the end of March. However, this year oversupply in the Spanish system has turned the situation on its head.

The news will come as no surprise for traders active in Spain, some of which predicted this could happen if the country remained unable to reduce its LNG stocks. These have built up since the summer as traders stockpiled LNG for the purposes of setting up reloads to formerly lucrative markets, such as Asia. But a collapse in global demand has left Spanish shippers with LNG held in-tank, with little option but to regasify and put it into the grid.

The number of vessels discharging in Spain is unchanged at 22 (unloading around 2.42TWh), but the number of reloads planned for December has collapsed.

There were 10 originally scheduled in October (lifting 1.43TWh), but this has dropped to four now (lifting just 0.41TWh), figures from Enagas show. With tank fullness currently very high, this extra 1.01TWh is proving problematic for shippers.

“Holding LNG in-tank [at the terminals] is very expensive,” one trader said, explaining why this gas was increasingly being fed into the grid.

As it stands, LNG terminal throughput in December – the volume of LNG converted back to natural gas – is currently nominated to be 11.85TWh, up 1.13TWh on the initial forecast published in late October.

In an attempt to offset this extra gas entering the Spanish market, pipeline imports are expected to be 333GWh lower in December, but this still leaves 795GWh, approximately equal to a standard-sized reload.

Underground storage

It is this gas that is now being fed into storage.

Initial Enagas nominations showed that stock levels across the country’s long-range storage sites would decline from 16.34TWh to 12.14TWh throughout December.

However, updated nominations show that Spain’s underground gas storage facilities will end the month 1.28TWh fuller, with 17.95TWh in store.

In total, Spain has 3.42 billion cubic metres (bcm) of storage capacity within its Gaviota, Serrablo, Yela and Marismas sites, according to industry association Sedigas, equivalent to around 33.38TWh.

For the year running from 1 April 2014-31 March 2015, the Spanish government set the operational capacity at 26.28TWh across the four plants, meaning that sites will end December 68% full. Rob Songer