Dutch Gate launches open season to test regional LNG demand

Source: Heren

2019/03/07

• Operator offers extra 2bcm/y of capacity

• Current shippers face berthing slot shortage

• France’s Fos also testing market interest

LONDON (ICIS)--The Dutch Gate LNG terminal operator formally launched an open season for 2 billion cubic meters (bcm) per year of new send-out capacity on Thursday, following a winter of record imports of the fuel into northwest Europe.

The extent of market interest in the new capacity, to be available from 2021-31, could provide an indication of regional buyers’ expectations for LNG demand in the years ahead.

Gate Terminal has held initial talks on the expansion since early 2018, but plans accelerated this winter due to “the improving outlook for utilisation of northwest European regas,” Commercial Manager Stefaan Adriaens told ICIS.

Regasified send-out from Gate has averaged 20 million cubic meters (mcm) per day so far this winter, compared with 0.8mcm/d in winter 2017/18, according to operator data collated by ICIS.

Despite the uptick, 1bcm out of Gate’s existing 12bcm/y capacity remains unsold. Under the open season procedure announced on Thursday, shippers will have to book this before the additional 2bcm becomes available.

Physical constraints

One LNG buyer at Gate, who asked to remain anonymous, said existing capacity holders would lead any market interest in the open season because berthing slots are already in short supply despite the unsold capacity.

“In the beginning there were plenty of slots at Gate, but nowadays it’s really a struggle to get the cargo in,” he said.

Capacity holders include EconGas, Shell, Uniper, Orsted, Eneco and RWE, according to LNG Edge.

A Dutch gas trader said Gate’s offering would bring much-needed supply flexibility to Europe’s benchmark TTF trading hub just as the Netherlands closes domestic production in Groningen and a storage site at Grijpskerk.

“It is one of the cheapest terminals, the location is great, linked to TTF. So in my view the business case makes sense. The only question is if the LNG will keep coming to the continent for the next 10 or more years.”

Regional regas

Even taking into account the recent surge in LNG supply to Europe, the continent’s terminals have together operated at 47% of total capacity in the year to date, according to LNG Edge, behind the 61% utilisation rate of terminals in the Asia-Pacific.

But Gate is not the only terminal in the region looking to expand. France’s Elengy launched an open season in February for post-2020 capacity covering Medmax and small-scale LNG carriers.

Spokespeople for terminals in France’s Montoir and Dunkirk, and Belgium’s Zeebrugge, said they did not have any plans to add capacity in the near term.

The UK’s South Hook and Dragon terminals did not respond to requests for comment.