Europe LNG Terminals See Ship Use Growing

LNG terminal
file photo

By Reuters 2016-09-27 19:34:19

European operators of large and underused LNG terminal capacity bet on new uses for their product in ships and vehicles to absorb future arrivals from the global market, the group's president Wim Groenendijk said on Tuesday.

While terminals only ran at a fifth of their capacity last year, GLE expects the E.U. bloc's green drive will help make them busier and absorb a wave of LNG from new origins such as the United States in coming years.

The European Commission has started to acknowledge that gas has a bigger role to play in decarbonization, Groenendijk said on the sidelines of a conference.

"There appears to be a shift away from a dogmatic anti-fossil fuels vision," he said.

The 28-nation bloc aims to reduce greenhouse gases emissions by 40 percent by 2030 over 1990 levels, with transport one of the identified areas for action.

And GLE sees new markets developing for LNG as a fuel for ships and trucks.

"That is an exciting growth option," said Groenendijk, making reference to research from consultancy Poyry.

Poyry's head of its gas and oil focus group, Andrew Morris, who was present at the event, said the two sectors could consume 15 billion cubic meters of gas in the E.U. by 2030 compared with 1 bcm now.

Suppliers have begun to respond.

Dutch pipeline operator Gasunie has built new LNG fuelling facilities for small ships in the Netherlands and sector peer Fluxys in Belgium.

The infrastructure will help ship owners meet stricter sulfur norms for bunker fuels when navigating the Baltic and North Seas.

LNG is also used to fuel heavy trucks, buses and cars.

GLE data showed some 221 bcm of regasification capacity is at present available per annum, half the size of Europe's total gas consumption, and another 29 bcm is under construction.

Groenendijk said that even if European gas demand remained flat, its indigenous production was going down. "This will be more significant than changes on the demand side," he argued.

Also, the flexible role that LNG could play was reason enough to bank on its future. Traders would be able to draw on the optionality of short-term supply, to the benefit of consumers.

When initial plans were launched for creating an LNG terminal in Lithuania, now in action, local gas prices dropped by 20 percent.

"The same applies for U.S. LNG," Groenendijk said.