LNG

OLT Offshore LNG Toscana SpA, the owner of the floating storage and regasification unit “FSRU Toscana”,  located offshore the West Coast of Italy, is auctioning a quantity of natural gas subject to various conditions.

The amount on offer is 101,400 megawatt hours under the conditions of a purchasing contract.

In addition, any bidders must have access to the Italian Virtual Exchange Point, the Punto di Scambio Virtuale (PSV), the national natural gas trading platform.

The Italian PSV is the sixth largest in Western Europe, after the Netherlands, the UK, Germany’s two trading points and the French platform, Trading Region France.

A second condition of the gas auction is that any buyer must have capacity access to the Italian natural gas transport system of Societa Nazionale Metanodotti (SNAM) Rete Gas SpA.

A final condition is that the documentation must be submitted from 9:00 am to 12:00 noon on 20 March 2020.

“Offers sent before or after this deadline will not be taken into consideration and will be automatically excluded,” said OLT Offshore.

SNAM agreed to acquire a controlling stake in the OLT Offshore LNG Toscana company in September 2019.

The vessel “FSRU Toscana” is moored 22 kilometres off the Italian coast between the cities of Livorno and Pisa.

It is connected to the Italian gas grid through a 36.5-kilometre pipeline from the shore.

SNAM acquired 49.07 percent of the share capital of OLT from Italian utility company, the Iren Group, and took joint control of the terminal with the global equity fund First State Investments.

The equity fund First State also bought German utility Uniper’s 48.24 percent stake in the facility in May 2019.

The only remaining original shareholders from the start-up of the LNG import project offshore Tuscany in 2013 is vessel owner Golar LNG with 2.69 percent.

Since operations began, the FSRU has handled LNG cargoes from 10 different countries, Algeria, Cameroon, Egypt, Equatorial Guinea, Nigeria, Norway, Peru, Qatar, Trinidad & Tobago and the United States.

The OLT Offshore facility  has traditionally provided national peak-shaving services to Italy with LNG cargoes.

SNAM said that is acquisition of OLT guaranteed industry expertise in the management of  a vital piece of infrastructure for the Italian energy system’s security and flexibility.

European natural gas trading in the day-ahead and month-ahead over-the-counter markets in London soared almost 27 percent in June but at much lower prices compared with the same month in 2018.

The Belgian Federal Commission for Electricity and Gas Regulation has approved the tariff and liquefied natural gas services agreement proposals for unloading slots and additional storage services at the Zeebrugge LNG import terminal.

The regulatory approval clears the way for Fluxys LNG to finalise new long-term contracts for the facility up to 2044.

“The approval allows us to turn binding interest from the market into new long-term contracts worth roughly 1 billion euros,” said Pascal De Buck, Chief Executive and Chairman of Fluxys Belgium, the transmission network operator.

The director of the regulatory Commission, Laurent Jacquet, said the tariffs have decreased for all terminal users who unload and store LNG, and inject natural gas into the transmission system.

“Through the new tariffs, the Commission has established a solid and stable framework for regulatory supervision in the future,” explained Jacquet.

“These favourable conditions consolidate Zeebrugge's position as an access point for LNG deliveries to Europe,” he added.

Fluxys said that the current long-term contracts for unloading at the Zeebrugge terminal expire in 2028.

During a subscription window held from 30 April until May 24 unloading slots and additional storage services at the Zeebrugge facility were offered over subsequent periods up to 2044.

“The subscription window proved highly successful and revealed binding interest from the market for the entire unloading capacity at the facility up to 2044,” stated Fluxys.

Fluxys and the regulator noted that the positive outcome of the subscription window process was the result of a combination of factors.

“Gas import needs in Northwest Europe are set to rise significantly,” they said.

“Gas production in The Netherlands and the North Sea is declining, while gas demand for power generation will increase to accommodate the phase-out of sizeable coal, lignite and nuclear power generation capacity in the region,” they added.

Fluxys stated that the subscription window offered an attractive tariff proposition together with optimum destination flexibility throughout Northwest Europe from a strategically positioned LNG terminal.

Zeebrugge is directly linked into the Belgian market (ZTP) and is fully interconnected with the gas systems of all surrounding markets.

These include the Dutch Title Transfer Facility (TTF) the German Gaspool, the Trading Region France (TRF) market and the UK National Balancing Point (NBP) and take-away capacity from the terminal is readily available.

The Dutch Title Transfer Facility natural gas price has strengthened its position as the main continental European day-ahead and month-ahead gas trading instrument, widening its lead over the UK National Balancing Point benchmark, though both prices suffered seasonal declines.

The Dutch Title Transfer Facility natural gas price has strengthened its position as the main continental European day-ahead and month-ahead gas trading instrument, widening its lead over the UK National Balancing Point price and with both prices followed in volume terms by German and Italian virtual hubs.

Natural gas trading through London in the popular European Dutch TTF, rose by 34.17 percent in March compared with a year ago while trading in the day-ahead UK benchmark NBP was down by 7.42 percent year-on-year.

The Dutch TTF and UK NBP prices are also the main indicators used when pricing Atlantic Basin LNG cargo trades.

Germany’s two day-ahead trading hubs were among the next three in volume terms, though separated by Italy, while the French PEG hub came sixth in the volumes list.

The Dutch TTF logged 2,723,912,634 megawatt hours of over-the-counter bilateral and cleared monthly trades, a rise of 12.61 percent over February 2019 and a 37.14 percent increase year-on-year from March 2018, according to the figures from the London Energy Brokers’ Association.

The London body is the industry association representing the UK Financial Conduct Authority-regulated wholesale market brokers in the OTC and exchange-traded European energy markets.

Figures also showed that the average day-ahead Dutch TTF price was 15.69 euros per megawatt hour ($5.17 per million British thermal units equivalent) in March 2019 versus 23.23 euros per MWh in March 2018, a price fall of 32.46 percent.

The UK NBP had 616,189,691 megawatt hours of bilateral and cleared OTC trades in March, a month-on-month rise of 17.17 percent, though the number was down 7.42 percent compared with March 2018.

The average NBP day-ahead price was 39.48 pence per therm ($5.15 per MMBtu) compared with 63.15 pence per therm in March 2018, a drop of 37.48 percent.

The other March OTC trading totals logged by London for European natural gas were:

NetConnect Germany (NCG) virtual trading point day-ahead volume 188,367,429 MWh; Italian Punto di Scambio Virtuale (PSV) 179,156,300 MWh; German Gaspool 120,795,08 MWh; France PEG 64,808,928 MWh; Austrian VTP 63,791,943 MWh; and Zeebrugge Hub 51,548,595 MWh.

The other European day-ahead gas hubs traded 26,502,029 MWh of contracts.