WINTER ENERGY OUTLOOK – STORAGE: Spain

Cem Bektas

08-Aug-2022

LONDON (ICIS)–Spain is on track to hit the EU’s 80% gas storage fullness requirement well before 1 November, with potential to remain a net gas exporter to France for the rest of 2022.

This is also likely to allow Spain to carry out LNG reloads during the same period, depending on the level of the country’s LNG imports.

SPANISH STORAGE LEVELS

In Spain, the available underground storage capacity fell to 3.62 billion cubic metres (bcm) for the storage year beginning 1 April 2022, down by 10 million cubic metres (mcm) year on year.

Despite slightly lower available capacity, the volume needed to maintain obligatory strategic minimum gas stocks (20 days of firm sales) has increased by 110mcm year on year to 2.12bcm.

Spanish gas grid operator Enagas announced on 27 July that the country’s stores were 77% full, already above the 71% storage fullness requirement set by the European Commission for 1 August this year.

Spain’s storage sites are currently around 79% full, eight percentage points higher year on year, according to data from Enagas.

Current storage levels make Spain one of the most comfortable European countries in that context, allowing it to export pipeline gas and LNG to Europe when required, a market participant told ICIS.

In July, Enagas CEO Arturo Gonzalo ruled out a gas supply crisis in Spain this winter.

GAS EXPORTS TO FRANCE

In July, net Spanish gas exports to France averaged 4.3mcm/day, in contrast with 4.0mcm/day of net imports from France in July 2021.

Nevertheless, ICIS has assessed the Spanish PVB Day-ahead contract at an average of €4.382/MWh above its French PEG counterpart between 29 July – 5 August.

This has led to a reversal in gas flows between the countries so far in August, with Spain receiving an average of 10.7mcm/day of gas from France between 1-7 August – 10.2mcm/day more than the same period last year.

Although currently a net importer from France, Spain’s position could easily revert to an exporting with adjustments to the PVB-PEG Day-ahead spread.

LNG CARGO RELOADS FROM SPAIN

Spain has carried out 15 LNG cargo reloads so far in 2022, seven more than the same period in 2021, according to ICIS LNG Edge.

A total of six LNG cargo reloads were carried out in Spain during June and July 2022 alone, five of which were delivered to Italy.

Spain’s LNG reload capabilities are likely to be strengthened when the country’s seventh and currently mothballed El Musel LNG terminal becomes operational in early 2023 .

The terminal, based in Gijon, northern Spain, is not connected to Spain’s central gas system and would instead be used to receive cargoes and store the LNG for re-export elsewhere, to help increase the region’s storage capacity.

The level of Spain’s LNG cargo reloads will depend on the number of laden vessels it receives over coming months.

Up to six LNG cargoes are expected to be delivered to Spain between 10-17 August, compared with four deliveries during the same time in 2021, ICIS LNG Edge showed.

PORTUGUESE STORAGE LEVELS

Spain’s Iberian neighbour, Portugal, meanwhile, has completely filled its underground gas stores.

This has been possible due to its small storage capacity of just 0.37bcm.

Although Portugal’s gas storage is completely full, the country’s small storage capacity means it may still be vulnerable to supply shortages during the winter period.

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