AB KN ENERGIES
By Mindaugas Navikas, KN Chief Sales Officer
Today, on October 1st, the new 2022 gas year of the liquefied natural gas (LNG) terminal operated by KN (AB Klaipėdos nafta) begins with 6 terminal users from Lithuania and foreign countries who booked LNG terminal's capacities (totally 8 TWh) and 17 LNG carriers to be received. We see this as a good indicator, given that, as part of the global gas market, Klaipėda LNG terminal inevitably falls into the whirlpool of trends in this huge market, caused by record high gas prices.
The change in natural gas prices, comparing several years in a row, is really striking in October 2018 the price of gas in Europe (TTF index) amounted to EUR 27.79 per megawatt-hour (Eur / MWh), in October 2019 - 12.86 Eur/MWh, in 2020 - 11.33 Eur / MWh, today it jumped to 63.42 Eur/MWh. Although this year is characterized by several times higher natural gas prices worldwide, the utilization rate of Klaipeda LNG terminal in natural gas (NG) year* 2021 remained high and reached about 42 percent (in NG year 2020 - almost 54%).
Looking at the previous NG year (2021), totally 74 (72 loading and 2 reloading) operations were performed at the Klaipėda LNG terminal, almost as much as in NG year 2020 (74 loading and 1 reloading operations). Last gas year LNG terminal received cargoes mainly from 4 different liquefaction plants in the U.S. Totally over 3 million cubic meters of LNG was delivered during this period (3.5 million cubic meters in the NG year 2020). We also received LNG cargo from Egypt, which, after an 8-year hiatus, resumed operations at the Damietta LNG liquefaction plant and, together with the Idku plant, exports LNG. During the NG year 2021, a total of 19.8 TWh was regasified and supplied to Lithuanian natural gas grid (23.9 TWh in the NG year 2020).
Comparing Klaipėda LNG terminal's performance to other terminals operating in Europe and assessing the calendar year, we can state that utilization rate of Klaipeda and other European LNG terminals are correlated: the average utilization rate of European LNG terminals is 38% (table attached).
We can only predict what the statistics for this gas year will actually look like, but at the moment it is not so easy even for the gas market experts. So what is happening on the map of natural gas supply and demand?
It is clear that Europe and the rest of the world are paying record-high prices for energy, not just natural gas, and some experts and analysts are hinting at a possible winter crisis: if temperatures fell sharply, demand for natural gas used for heating would rise more, yet natural gas levels of gas storage facilities around Europe is below the average of the last few years.
The cold winter and spring of this year have already depleted Europe's natural gas storage reserves, which were expected to be filled during the summer, but was delayed with a hope that gas prices would fall or start to stabilize. However, the reality is that instead of expectation of stabilized gas prices, they have continued rising.
The demand for natural gas this year is huge also because it is the most energy-balancing fuel, and LNG is also the cleanest fossil fuel. Countries transitioning from coal to more sustainable fuels, such as China, Japan and South Korea, garbs the biggest share of the LNG market, leaving smaller markets to "starve". Due to the global shortage of gas supply, Asia and Europe began to compete with each other, which inevitably affected the price of gas. The shortage of electricity in South America has also increased the competition for gas on this continent. The global economy is gas-hungry and recovering from a coronavirus pandemic. Russia's political card for the Nord Stream 2 project and the reduction of natural gas supplies to Europe are also not in the last place.
All these reasons and trends also affect the activities of Klaipėda LNG terminal and its users, but in such market conditions, it is worth remembering that Lithuania have the opportunity to import gas at a competitive price at any time. Therefore, even in this period of supply and demand turbulence, influenced by objective market factors, the LNG terminal remains a guarantor of energy security. If Lithuania had not diversified gas import sources in 2014 and built an LNG terminal, we would not have that choice. Competitive gas prices are a very important, but still not the only effect of LNG import infrastructure in Klaipeda.
It is also important to emphasize that the costs of maintaining the LNG terminal infrastructure do not change due to the rising prices of natural gas, and the maintenance of the terminal is not getting more expensive for natural gas consumers. For example, the cost of an LNG terminal (KN's share in the so called 'security supplement') in the natural gas price for the end users, consuming up to 300 cubic meters of natural gas per year, accounts for only 1.5 percent. It is only 0.05 Eur/cubic meter (2021 I half).
* Natural gas year lasts from October 1st, 2021 until September 30th, 2022.
Utilization rate of the European terminals (%)
Today, on October 1st, the new 2022 gas year of the liquefied natural gas (LNG) terminal operated by KN (AB Klaipėdos nafta) begins with 6 terminal users from Lithuania and foreign countries who booked LNG terminal's capacities (totally 8 TWh) and 17 LNG carriers to be received. We see this as a good indicator, given that, as part of the global gas market, Klaipėda LNG terminal inevitably falls into the whirlpool of trends in this huge market, caused by record high gas prices.
The change in natural gas prices, comparing several years in a row, is really striking in October 2018 the price of gas in Europe (TTF index) amounted to EUR 27.79 per megawatt-hour (Eur / MWh), in October 2019 - 12.86 Eur/MWh, in 2020 - 11.33 Eur / MWh, today it jumped to 63.42 Eur/MWh. Although this year is characterized by several times higher natural gas prices worldwide, the utilization rate of Klaipeda LNG terminal in natural gas (NG) year* 2021 remained high and reached about 42 percent (in NG year 2020 - almost 54%).
Looking at the previous NG year (2021), totally 74 (72 loading and 2 reloading) operations were performed at the Klaipėda LNG terminal, almost as much as in NG year 2020 (74 loading and 1 reloading operations). Last gas year LNG terminal received cargoes mainly from 4 different liquefaction plants in the U.S. Totally over 3 million cubic meters of LNG was delivered during this period (3.5 million cubic meters in the NG year 2020). We also received LNG cargo from Egypt, which, after an 8-year hiatus, resumed operations at the Damietta LNG liquefaction plant and, together with the Idku plant, exports LNG. During the NG year 2021, a total of 19.8 TWh was regasified and supplied to Lithuanian natural gas grid (23.9 TWh in the NG year 2020).
Comparing Klaipėda LNG terminal's performance to other terminals operating in Europe and assessing the calendar year, we can state that utilization rate of Klaipeda and other European LNG terminals are correlated: the average utilization rate of European LNG terminals is 38% (table attached).
We can only predict what the statistics for this gas year will actually look like, but at the moment it is not so easy even for the gas market experts. So what is happening on the map of natural gas supply and demand?
It is clear that Europe and the rest of the world are paying record-high prices for energy, not just natural gas, and some experts and analysts are hinting at a possible winter crisis: if temperatures fell sharply, demand for natural gas used for heating would rise more, yet natural gas levels of gas storage facilities around Europe is below the average of the last few years.
The cold winter and spring of this year have already depleted Europe's natural gas storage reserves, which were expected to be filled during the summer, but was delayed with a hope that gas prices would fall or start to stabilize. However, the reality is that instead of expectation of stabilized gas prices, they have continued rising.
The demand for natural gas this year is huge also because it is the most energy-balancing fuel, and LNG is also the cleanest fossil fuel. Countries transitioning from coal to more sustainable fuels, such as China, Japan and South Korea, garbs the biggest share of the LNG market, leaving smaller markets to "starve". Due to the global shortage of gas supply, Asia and Europe began to compete with each other, which inevitably affected the price of gas. The shortage of electricity in South America has also increased the competition for gas on this continent. The global economy is gas-hungry and recovering from a coronavirus pandemic. Russia's political card for the Nord Stream 2 project and the reduction of natural gas supplies to Europe are also not in the last place.
All these reasons and trends also affect the activities of Klaipėda LNG terminal and its users, but in such market conditions, it is worth remembering that Lithuania have the opportunity to import gas at a competitive price at any time. Therefore, even in this period of supply and demand turbulence, influenced by objective market factors, the LNG terminal remains a guarantor of energy security. If Lithuania had not diversified gas import sources in 2014 and built an LNG terminal, we would not have that choice. Competitive gas prices are a very important, but still not the only effect of LNG import infrastructure in Klaipeda.
It is also important to emphasize that the costs of maintaining the LNG terminal infrastructure do not change due to the rising prices of natural gas, and the maintenance of the terminal is not getting more expensive for natural gas consumers. For example, the cost of an LNG terminal (KN's share in the so called 'security supplement') in the natural gas price for the end users, consuming up to 300 cubic meters of natural gas per year, accounts for only 1.5 percent. It is only 0.05 Eur/cubic meter (2021 I half).
* Natural gas year lasts from October 1st, 2021 until September 30th, 2022.
Utilization rate of the European terminals (%)
| LNG terminal, country | 2017 | 2018 | 2019 | 2020 | YTD 2021* |
| Zeebruge, BE | 7% | 17% | 45% | 29% | 23% |
| Swinoujscie, PL | 31% | 50% | 61% | 67% | 68% |
| Sines, PT | 55% | 59% | 85% | 81% | 83% |
| Revithoussa, GR | 21% | 15% | 34% | 33% | 25% |
| Montoir-de-Bretagne, FR | 23% | 33% | 67% | 68% | 45% |
| Dunkirk, FR | 5% | 8% | 39% | 24% | 30% |
| Fos Tonkin, FR | 59% | 44% | 58% | 49% | 40% |
| Fos Cavaou, FR | 41% | 45% | 50% | 43% | 49% |
| Klaipeda, LT | 28% | 20% | 44% | 49% | 40% |
| Gate, NL | 5% | 18% | 50% | 46% | 44% |
| Panigaglia, IT | 15% | 21% | 59% | 61% | 35% |
| Toscana, IT | 16% | 20% | 64% | 57% | 34% |
| Sagunto, ES | 19% | 1% | 22% | 18% | 17% |
| Mugardos, ES | 28% | 28% | 34% | 51% | 54% |
| Huelva, ES | 33% | 31% | 38% | 34% | 25% |
| Cartagena, ES | 5% | 4% | 13% | 24% | 18% |
| Bilbao, ES | 36% | 39% | 74% | 71% | 47% |
| Barcelona, ES | 29% | 26% | 30% | 22% | 14% |
| Krk, CR | n/a | n/a | n/a | n/a | 56% |
| South Hook, UK | 22% | 11% | 43% | 46% | 23% |
| Grain, UK | 4% | 12% | 27% | 24% | 25% |
| Vidutinis | 24% | 25% | 47% | 45% | 38% |
| According to GIE ALSI data. |
Attachments
- Original document
- Permalink
Disclaimer
Klaipedos Nafta AB published this content on 01 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 October 2021 12:41:02 UTC.
