LNG

Dutch utility Gasunie, whose network and assets include over 17,000 kilometres of pipelines in the Netherlands and northern Germany as well as stakes in Dutch and German LNG import facilities, has explained its energy security plan now that the Groningen gas field in the Netherlands is no longer active and imports of Russian gas have almost ceased.

Gasunie noted that global demand for LNG also currently exceeds supply, which means security of supply is no longer a given.

The utility said that Gasunie Transport Services (GTS) was being assigned the statutory duty to give annual advice on the security of natural gas supply and has drawn up a plan that was being presented to the Dutch Ministry of Economic Affairs and Climate Policy.

“The GTS vision emphasises the importance of proactive measures to guarantee the security of natural gas supply in the short and long term, while factoring in the challenges presented by the current market and changing climatic conditions,” Gasunie explained.

“The vision still features an important role and responsibility for market parties, but does propose several extra market rules allowing for intervention if deemed necessary to guarantee security of supply,” the report added.

Gasunie has LNG import facility stakes in the Dutch Gate terminal in Rotterdam and the Eemshaven import hub in Groningen,

The utility is additionally involved in the German natural gas market and in developing the onshore LNG terminal in Brunsbüttel on the Elbe.

Guarantees

“A continuous sufficient gas supply and well-filled gas storage facilities for the winter periods are needed to guarantee security of supply,” said the report.

“The Netherlands currently depends on imports for 75 percent of its gas consumption,” it noted.

“Given the closure of the Groningen field and declining domestic production, this dependence will become even greater,” Gasunie stated.

“The Netherlands would therefore benefit from a well-functioning European internal gas market as would other EU member states,” the utility added.

There are also now likely to be additional statutory measures in the 27-nation EU to fill gas storage facilities.

As of mid-2022, supply from Russia to northwest Europe ceased almost entirely.

This is being compensated for by maximum pipeline gas imports from Norway and maximum LNG supply through the Gate terminal and the EemsEnergy Terminal throughout the year.

“This supply covers basic demand, but can barely make an additional contribution in winter,” said Gasunie.

“Since LNG supply is stable over the course of the year, it is not sufficient to allow for seasonal flexibility. All in all, this means that seasonal storage facilities will be the primary source of seasonal flexibility in the years to come, even more so than in previous years,” Gasunie declared.

Gasunie explained that although market parties determined the flows of gas flows, commercial motives were sometimes at odds with guaranteeing security of supply.

Statutory measures

Several additional statutory measures are, therefore, proposed such as establishing a statutory standard filling level for seasonal storage facilities that market parties need to adhere to.

This could also see the government designate a party to act as back up in the event that the market parties do not meet their obligations on time.

“To create sufficient supply for the long term, expanding LNG import capacity, as is currently happening at Gate and the German terminals, remains crucial for security of supply. Existing LNG plants will also need to remain available,” said Gasunie.

Gasunie warned that if the coming winters were colder than average, seasonal storage facilities would be empty quicker and that would mean that there would be “a realistic chance” of insufficient supply capacity volumes to fill seasonal storage facilities back up to the standard filling level.

“In close collaboration with the Ministry of Economic Affairs and Climate Policy and other relevant stakeholders, GTS is making every effort to create a sustainable and reliable gas supply for the Netherlands,” Gasunie concluded.

Trading Hub Europe GmbH, Germany’s market area manager for the nation’s natural gas system and now including deliveries to three LNG import destinations, has issued its latest report on the calculation basis for accounting charges and liquidity buffers in the German natural gas market.

Gasunie, the Dutch utility and co-owner of the Rotterdam and Eemshaven LNG import facilities and a stakeholder in the onshore German regasification facility planned for Brunsbüttel, has named Willemien Terpstra as the next Chief Executive and Chairwoman of the Board.

INEOS Group, the global petrochemicals manufacturer with over 190 facilities in nearly 30 countries and whose Chairman Jim Ratcliffe is seeking a stake in soccer team Manchester United, has entered the LNG shipping fleet market for the first time to transport US export volumes.

Ratcliffe, who is a trained chemical engineer who used to work for ExxonMobil Chemicals and now has joint ventures with Chinese groups like Sinopec, was the first to import US shale gas into Europe. His other interests include soccer team investments.

INEOS Energy Trading signed agreements with the Japanese shipping company Mitsui OSK Lines (MOL) for two newbuild LNG carriers to be used for the importation of LNG into Germany from the United States.

Port Arthur LNG

These agreements are a significant shipping move by INEOS following the long-term Sales and Purchase Agreement signed with US utility Sempra for 1.4 million tonnes per annum of cargoes from the planned Port Arthur LNG export project in Texas.

Ratcliffe’s company purchased the volumes to ship to its long-term regasification capacity holding at Brunsbüttel, the proposed onshore German LNG import terminal on the Elbe River north of Hamburg.

The small Brunsbüttel port is currently operating a floating storage and regasification facility (FSRU) for LNG shipments to replace the cut-off supplies of Russian pipeline natural gas to Germany and the European Union via the North Stream routes.

“INEOS will capitalise on its experience as the largest transporter of ethane gas from the US to Europe and Asia, to develop a ‘pipeline’ of LNG into Europe to service its own demand, as well as that of select third parties,” explained INEOS.

The comoany said that both LNG vessels will have a capacity of 174,000 cubic metres and are being built at Daewoo Shipbuilding & Marine Engineering at Okpo in South Korea and would be equipped with the latest MAN Energy Solutions engines.

“It was extremely important that we selected modern, efficient vessels with environmental considerations embedded in the design,” said David Bucknall, Chief Executive of INEOS Energy Trading.

“We agreed an engine type and vessel specification with MOL that we believe is optimal for reducing carbon emissions and methane slip,” Bucknall explained.

Opportunities

“We will continue to work with MOL to identify further opportunities to reduce emissions as both companies work towards a net zero future,” the CEO stated.

Whilst INEOS has an extensive fleet of ethane and naphtha carriers, these two vessels signify their first entry into the LNG carrier market.

“We are delighted to be working with MOL, who have a great deal of experience shipping LNG and an excellent reputation,” Bucknall said.

“We look forward to developing the relationship, both during the charter period and beyond,” he added.  

Höegh LNG Ltd, the owner and operator of 13 LNG vessels including floating storage and regasification (FSRU) units, said it was focusing ensuring that FSRU projects commence operations as planned for customers in Germany, France and Brazil over the coming months as it posted increased profits.

French and Spanish engineering companies have been awarded the contract for the onshore LNG import terminal being developed at Brunsbüttel on the Elbe River north of Hamburg.

Höegh LNG Holdings, the owner of 10 floating storage and regasification units and two conventional LNG carriers, reported net losses for the fourth quarter and the year during a busy period as three vessels were prepared for FSRU operations in Germany and Brazil.

Gasunie, the Dutch utility and LNG import terminal shareholder in the Netherlands and Germany, said it was working on options to increase LNG with further expansion of the existing capacity off the North Sea port at Eemshaven and at the Gate facility in Rotterdam.

Gasunie admitted that a recently announced feasibility study had shown that a new floating LNG terminal in the port of Terneuzen in the Dutch Zeelandic region was not feasible in the short term.

“In this study, Gasunie is working closely with Vopak,” said the utility in reference to the Dutch storage company and its partner in the Rotterdam terminal.

“The aim of realising temporary LNG import capacity in Terneuzen in the short term and for a limited period proved to be technically and commercially unfeasible,” explained Gasunie.

“It is therefore unwise to embark on the construction of a temporary additional terminal,” it added.

“Gasunie thanks its project partners and stakeholders in Zeeland for the good cooperation in the study phase,” stated Groningen-based Gasunie.

Brunsbüttel stake

Gasunie is additionally a shareholder in the proposed German onshore LNG import terminal at Brunsbüttel on the Elbe River.

Its partners in Brunsbüttel are the German utility RWE and the German federal finance agency, Kreditanstalt für Wiederaufbau (KfW).

Gasunie said that the exploration of a new floating LNG terminal in the Netherlands is part of a broader package of proposed measures to increase LNG import capacity.

“This is necessary to cope with the loss of Russian natural gas and reduce scarcity of gas in the European market,” said the company.

Gasunie said it would continue to explore new opportunities for import capacity.

“For example, work is now continuing on initiatives to further expand the existing capacity of the LNG terminals in the Netherlands at Maasvlakte (Gate terminal) and in Eemshaven,” said the company.

“At the Gate terminal, this involves a possible fourth tank with a capacity of 4 billion cubic metres of natural gas and at Eemshaven, a technical optimisation of the existing plant is being investigated,” it added.

“The ambition of EemsEnergy Terminal is to be able to handle 9 billion cubic metres of natural gas before the end of this year and then to grow to 10 Bcm,” stated Gasunie.

European chemicals company INEOS has signed a 20-year contract with Sempra Infrastructure for the supply of about 1.4 million tonnes per annum of LNG from the US Port Arthur project under development in Texas.

INEOS added that under the agreement it had signed up for 1.4 MTPA from Phase 1 of the project and also signed a non-binding heads of agreement for the potential purchase of an additional 0.2 MTPA from the Port Arthur LNG Phase 2 project under development.

The first deliveries from the US Gulf Coast plant are expected in 2027.

INEOS noted that it also signed a contract for long-term regasification capacity in a proposed German onshore LNG terminal at Brunsbüttel on the Elbe River north of Hamburg.

“These agreements mark INEOS’s entry into the global LNG market. The company is a first mover among European corporates as it secures competitive sources of energy to meet its own needs and those of its customers in Europe,” stated the company.

The agreements come at a critical time for energy markets and will provide much needed security of supply for Europe.

Brian Gilvary, Chairman of INEOS Energy, said the agreements were very important for the company.

Atlantic corridor

“This long-term contract with Sempra and the agreement of regasification capacity in Brunsbüttel secures the key areas of the value chain for INEOS across the Atlantic corridor and represents a major step forward in the INEOS Energy journey at a time of significant transformation in the energy industry,” explained Gilvary.

The Port Arthur LNG project is a fully permitted facility on a 3,000-acre site in Jefferson County, Texas.

It is expected to include two natural gas liquefaction trains and LNG storage tanks and associated facilities capable of producing up to 13.5 MTPA from an initial two liquefaction Trains.

The Brunsbüttel import terminal near the Kiel Canal is being developed by the company, German LNG Terminal GmbH.

It will have initial an annual throughput capacity of 8 billion cubic metres of natural gas per year and may be expanded to at least 10 Bcm.

US major ConocoPhillips and QatarEnergy will combine to provide 2 million tonnes per annum of LNG to Germany’s new onshore import terminal under development at Brunsbüttel on the Elbe River.