LNG

The largest European LNG import terminal, the UK Isle of Grain facility located southeast of London, has called on the market to participate in an expression of interest exercise for capacity.

Grain LNG has issued a statement inviting market participants to express an interest in low-cost capacity at the facility from 2029.

Applicants will have until August 15, 2022, to submit a non-binding declaration of their interest in capacity at Grain LNG.

“This is an opportunity for the market to indicate the quantities and duration of the contracts they would like, enabling Grain LNG to determine the best way to proceed and the capacity products to offer,” said the company.

Grain LNG, a subsidiary of the UK’s London Stock Exchange-listed National Grid plc, explained that it had a series of existing capacity contracts coming to an end over the course of 2029.

As a result, Grain LNG expects to be able to offer at least 360,000 cubic metres of storage and 300 gigawatt hours per day of regasification capacity for start-up in 2029.

Short-term contracts

“As the capacity already exists, this will enable Grain LNG to uniquely offer short-term contracts of five years or more and should result in significantly lower cost capacity versus new build terminals,” the company explained.

Nicola Duffin, Commercial Director at Grain LNG, said that LNG represented an ever more vital component in the UK and global energy mix and supported security of supply.

“This looks set to continue in the context of the wider market. LNG is also an important balancing tool for intermittent renewables,” added Duffin.

“The EOI provides a great opportunity to gauge market needs and help us to develop the packages and product offerings that meet those requirements,” she stated.

Grain LNG explained that once the application window closes, responses will be assessed, the product offering finalised and the need for an auction will be determined.

“Any auction plans must gain Ofgem (regulatory) approval and are subject to a market consultation before the binding auction phase can be launched,” said Duffin.

Grain LNG in addition to being the largest regasification terminal in Europe is also the only one in the UK able to process the full global range of LNG.

As a completely independent operator, Grain provides 40 percent of the UK’s LNG capacity, offering two entry points to the National Balancing Point gas market and cost-effective access to Northwest Europe.

Grain LNG already has plans for up to 300 gigawatt hours per day, or around 7.2 million tonnes per annum of LNG, of redelivery capacity and 380,000 cubic metres of associated storage, to be made available from mid-2025.

The expansion will increase the size of storage at the terminal, located on the Isle of Grain in Kent on the Thames-Medway estuaries, to about 1.2 million cubic metres.

Grain LNG also offers reloads, trans-shipments and a multi-bay facility for reloading road tankers and ISO containers.

Europe’s largest LNG import terminal, the Isle of Grain facility located 45 miles southeast of London on the Medway-Thames estuary in Kent, has received 22 LNG shipments in 2020, including its 500th overall cargo, as the UK’s three terminals have unloaded around 60 shipments in two-and-a-half months.

US cargoes and others from Atlantic Basin exporters as well as Russia have been pointed at the UK as a key destination as prices have tumbled in Asia at just over $3.00 per million British thermal units for most of 2020 amid a global over-supply.

The UK National Balancing Point (NBP) price was last at the equivalent of $2.95 per MMTU, down from $3.70 per MMBtu in January, while the main Continental European price, the Dutch Title Transfer Facility (TTF), has tracked the UK benchmark, but was slightly higher at $3.00 per MMBtu.

“We’re delighted to confirm that we welcomed the 500th ship at our LNG import terminal on the Isle of Grain,” said Simon Culkin, Terminal Manager at National Grid's Grain LNG.

“The ‘LNG Merak’ berthed, delivering a cargo from Zeebrugge, and is the 22nd ship to arrive at Grain this year,” added Culkin.

The 174,000 cubic metres capacity “LNG Merak” is one of the newest vessels transporting cargoes from the Russian Yamal export plant in northern Siberia, as well as trans-shipments from ports such as Zeebrugge in Belgium.

“Since commissioning our terminal in 2005, we have taken delivery of LNG from 13 countries, further strengthening the diversity and security of UK gas supplies,” Culkin stated.

LNG carrier deliveries to Grain LNG have been more than matched by the two terminals at Milford Haven in Wales, South Hook LNG and Dragon LNG, which have welcomed a combined 35 cargoes.

The growing UK’s deliveries since January have come from nations such as the US, Qatar, Nigeria, Trinidad and Russia.

LNG shipments to Britain increased by around 64 percent in 2019 compared with the previous year and 2020 is expected to be  a record year as more US capacity has come on stream.

Natural gas currently makes up 40 percent of the UK’s total energy mix, up from 35 percent in 2015.

About 45 percent of UK natural gas comes from domestic resources in the North Sea and 55 percent is imported, with 15 percent coming from LNG and 40 percent from pipeline imports, mostly from Norway.

“LNG delivers much needed flexibility and energy reliability, enabling the integration of intermittent renewable energy and provides access to affordable energy,” explained National Grid’s Culkin.

“We’re very proud that LNG, supported by our extensive infrastructure at Grain,’ he added.

LNG imports have increased significantly over the past six months all over Europe, including to other large importers such as France and Spain.