LNG

Italian floating LNG terminal company, OLT Offshore LNG Toscana controlled by Italian natural gas grid and LNG terminals operator Societa Nazionale Metanodotti (SNAM), said the “FSRU Toscana” vessel would be undergoing long-term maintenance at a shipyard and would be offline for six months.

Latin American and Caribbean nations imported more LNG during the first quarter and there was also a surge in cargo re-loads in Europe as well as quarterly and March exports from global liquefaction plants.

The Italian Port of Piombino in northwest Italy, located opposite the island of Elba, is facing further delays to host one of two floating storage and regasification units purchased by Italy’s grid and LNG terminals operator SNAM.

An Italian administrative court has postponed to July 5 a decision over a case being pursued by local opponents of the Piombino FSRU.

SNAM has plans to deploy the 154,950 cubic metres capacity FSRU “Golar Tundra” at Piombina.

However, some members of Piombino's municipal administration filed a legal challenge in late 2022 against the government-backed project, part of Italy’s plan to support the European Union’s replacement of Russian pipeline gas with LNG deliveries from nations such as the US, Qatar, Algeria and Egypt.

The government-appointed commissioner for the FSRU project, Eugenio Giani, had previously issued a statement saying he hoped to have authorization from the local municipality by the end of October, 2022, though instead they raised a challenge.

Ideal FSRU site

Commissioner Giani has said that Piombina was an ideal site for an FSRU with its under-used jetty and nearby pipeline gas infrastructure connections.

He has noted that there was no other place in that region of Italy where there was a “substantially unused jetty of 300 metres in length” and pipeline links.

The Piombina FSRU and the second SNAM FSRU would be Italy’s fourth and fifth LNG import terminals after the onshore facility at Panigaglia near Genoa, another FSRU offshore the port of Livorno and the Adriatic LNG facility, an offshore gravity-based structure on the east coast.

The second SNAM FSRU is the 170,000 cubic metres capacity “BW Singapore”. The vessel was purchased by SNAM and is currently bound by a charter agreement with a third party until November 2023.

According to SNAM the “BW Singapore” could be deployed eventually in the upper Adriatic Sea, close to the Port of Ravenna where there is already a small-scale onshore LNG fuel terminal and other petroleum storage infrastructure.

SNAM, the Italian natural gas grid and LNG terminals operator, said the most recent projections for the evolution of gas demand in Italy this year point to a decline by year-end compared with 2021 because of higher prices, milder weather and more LNG cargoes brought in to help boost storage.

Natural gas demand in Italy fell by 3.2 percent in the first nine months of 2022 to 51.66 billion cubic metres from 53.40 Bcm in the same period of 2021.

SNAM said natural gas moving through the storage system in Italy in the first nine months rose by 8.3 percent to 15.71 Bcm versus last year’s 14.51 Bcm.

“In the first nine months of 2022, the LNG terminal of Panigaglia (La Spezia, near Genoa) regasified 1.47 Bcm of LNG and increase volumes by 34.9 percent as 38 LNG carriers were unloaded compared with 25 carriers unloaded in the same period of 2021,” said SNAM.  

“The warmer weather, the effects of the increase in energy prices in the industrial sector as well as the measures envisaged in the ‘National Natural Gas Consumption Containment’ plan have cut demand and improved supplies,” said SNAM.

“Despite the reduction in imported Russian gas flows to Italy experienced in particular in the third quarter of 2022, the overall performance is not expected to be impacted significantly this year,” added the company.

“The current European gas market is affected by uncertainty on the supply side. This has engendered substantial volatility at the European hubs in past months with sharp price differentials in markets with greater regasification capacity,” explained SNAM.

Price forecasts

“Although prices are currently subsiding after the records posted in August because of the high level of gas in storage facilities and the European demand containment plan, forward prices for the coming winter months remain strong and above €100 per megawatt hour pending the arrival of colder weather,” it stated.

The numbers came in SNAM’s nine-month earnings report in which revenues rose by 10.3 percent to €2.40 billion ($2.41Bln) compared with €2.17Bln the same period of 2021.

The company's nine-month net profits declined by 0.6 percent to €932 million from €938M in the prior-year period.

SNAM, whose name comes from Societa Nazionale Metanodotti (National Pipeline Company), operates the onshore Panigaglia LNG facility as well as having a controlling stake in the LNG facility, the “FSRU Toscana”, the floating storage and regasification unit (FSRU) moored off the Italian coast between the cities of Livorno and Pisa.

SNAM has also agreed to purchase two stakes held by Italian oil and gas company Eni in natural gas pipelines from Algeria, though the deals have not yet gone through.

“With regard to the agreement announced on November 27th, 2021 concerning the sale to SNAM of 49.9 percent of the investments held by Eni in the companies that manage the two groups of international gas pipelines connecting Algeria to Italy, the closing of the transaction has been postponed to the end of the year, pending the completion of the authorisation process,” SNAM explained.

FSRU deployments

SNAM is additionally bringing two more FSRU into the Mediterranean to increase the quantities of LNG available to Italy, including the “BW Singapore” being purchased from BW Group of Singapore.

SNAM agreed a similar deal at the start of June 2022 with shipping group Golar LNG, acquiring the FSRU “Golar Tundra” for $350 million to help boost imports.

“With receipt of authorisation to begin operation of our regasification vessels, we take the first step in the remodelling of our national energy security, which will soon have to be accompanied by the expansion of transport and storage infrastructure and an acceleration of initiatives for the transition, in which SNAM expects to play a leading role,” declared SNAM Chief Executive Stefano Venier in the earnings report.

“Performance in the first nine months of 2022 confirms the soundness of the Group’s action even in an environment clouded by uncertainty,” he added.

“The strong performance of our entire Italian business despite the reduction in regulated rates in the gas segment, the contribution of our foreign associates and the new businesses connected with the energy transition have contributed to the stability of our profits,” stated the CEO.

Italy has approved two projects for floating LNG import terminals off the coast of Ravenna in the eastern Adriatic Sea and at the West Coast port of Piombino, opposite the island of Elba.

Italy has said that as part of its energy security strategy two floating storage and regasification units (FSRUs) will be added to the three existing LNG import facilities.

The two new LNG terminals, both to be operated by Italy's state-controlled gas grid operator SNAM, will have a capacity of 5 billion cubic metres, covering around 15 percent of national annual gas consumption.

The FSRUs will be Italy’s fourth and fifth LNG import terminals after the onshore facility at Panigaglia near Genoa, another FSRU owned by OLT Offshore Toscana off the port of Livorno and the Adriatic LNG facility, an offshore gravity-based structure on the east coast.

The FSRU destined for Ravenna, the 170,000 cubic metres capacity “BW Singapore”, was purchased by SNAM and is currently bound by a charter agreement with a third party after which it will be deployed by the end of 2024.

SNAM Chief Executive Stefano Venier said that preparatory works would last two years with the Ravenna terminal expected to start operations in the fourth quarter of 2024.

“We have chosen Ravenna and Piombino both for the technical characteristics they offer us, but also because they're close to consumers,” stated Venier.

Italy is planning on the Piombino FSRU being operational by the end of March 2023.

The Piombino terminal will be in the form of the deployment of the 154,950 cubic metres capacity FSRU vessel “Golar Tundra”.

Ideal location

The port of Piombina was chosen because there was no other place in that region of Italy where there was a substantially unused jetty of 300 metres in length.

In addition the FSRU will be only 8.8 kilometres (5.5 miles) from the main SNAM gas network connections.

SNAM also officially ended its gas injection campaign at the end of October with the level of gas stocks managed by subsidiary Stogit reaching 95.2 percent for a total of 11.2 Bcm of natural gas in addition to the 4.5 Bcm held as strategic reserves.

The network operator added that the national energy system would also have access to an additional 1.1 Bcm held in the storage facilities of other operators.

“The supply of gas from storage will take place in the coming months on the basis of the guidelines soon to be issued by the Ministry of the Environment and Energy Security using transparent auction mechanisms,” added SNAM.

The Italian Port of Piombino in northwest Italy, located opposite the island of Elba, has been chosen as the preferred site amid local opposition for one of two floating storage and regasification units purchased by Italy’s grid operator SNAM to improve energy security.

The oldest Italian LNG import terminal, the onshore Panigaglia facility near the port of Genoa, is set to receive more cargoes for the 2022-2023 winter season as the nation fully mobilises its regasification assets to help the European Union emerge from the supply crisis.

Panigaglia was Italy’s first ever LNG terminal and has been operational since 1969.

The Italian gas grid operator SNAM, whose name comes from Societa Nazionale Metanodotti (National Pipeline Company), runs the Panigaglia terminal as well as having a 49 percent stake in the LNG facility, the “FSRU Toscana”, moored off the Italian coast off the port of Livorno.

Italy currently has three full-scale LNG import terminals, the third being the Adriatic terminal co-owned by units of ExxonMobil Corp, and QatarEnergy.

Adriatic LNG is located 15 kilometres (9.3 miles) off the Veneto coastline and is a gravity-based structure.

The first additional cargo for Panigaglia was delivered on October 9 from Angola in southwest Africa after having been reloaded onto smaller ships at Spanish terminals for them to be compatible with the onshore terminal in Italy’s Liguria region, the crescent shaped coastal area also known as the Italian Riviera.

Cargo deals

“Further LNG deliveries from Egypt and Algeria are also expected in October at onshore Panigaglia,” said a statement from the supplier, Italian oil and gas company Eni.

“The overall contribution of additional LNG volumes to Italy, thanks to the availability of regasification terminals currently under development (FSRUs), will exceed 2 billion cubic metres between 2022 and 2023,” explained Eni.

“It will progressively reach 7 Bcm between 2023 and 2024, and will exceed 9 Bcm between 2024-2025, in addition to further supplies to be delivered via pipeline,” stated Eni.

SNAM has additionally agreed to buy a second floating storage and regasification unit (FSRU) from BW LNG of Singapore after purchasing the first FSRU from Norwegian fleet owner Golar LNG.

SNAM has signed an agreement to buy the “BW Singapore” which like the Golar vessel can act as a conventional carrier or an FSRU.

The “BW Singapore” was built in 2015 and has storage capacity of about 170,000 cubic metres and a nominal continuous regasification capacity of about 5 Bcm per annum.

The FSRU, which is currently bound by a charter agreement with a third party until November 2023, is expected to be based in the upper Adriatic Sea, close to Ravenna.

SNAM said the “BW Singapore” acquisition was financed from its own resources for an amount of around $400M.

SNAM agreed a similar deal at the start of June 2022 with Golar LNG, acquiring the FSRU “Golar Tundra” for $350M.

The 170,000 cubic metres capacity “Golar Tundra” may be deployed near a port on the Italian island of Sardinia.

The two FSRUs acquired by SNAM will contribute 13 percent of the national gas demand alone. 

Adriatic LNG, the operator of the largest of three Italian regasification terminals, said it was ready to offer more capacity to Italy and Europe with an increase from 8 billion cubic metres per annum to 9 Bcm per annum.

The terminal is located 15 kilometres (9.3 miles) off the Veneto coastline and is a gravity-based structure.

The Italian Ministry of Ecological Transition, with Decree 4 of March 15, 2022, verified the facility’s compliance with the environmental pre-operating conditions of a new decree.

The terminal has been on line since autumn 2009 and is a private operator. It is co-controlled by ExxonMobil Italiana Gas and Qatar Terminal Ltd, a subsidiary of QatarEnergy, while Italian gas network operator SNAM has a 7.3 percent shareholding.

It has so far handled more than 800 cargoes at its offshore base. The terminal includes two LNG storage tanks, each with a capacity of 125,000 cubic metres.

“The Adriatic LNG terminal is a unique case in the panorama of Italian and European regasification terminals, as it has for years boasted the highest average utilization rate. It was 92 percent in 2021 against a monthly average at European level of between 29 percent and 40 percent,” said the company.

Private resources

“In addition, the infrastructure was built and is managed with private resources without, therefore, any financial burden on the gas system and without constituting a cost in the bill for citizens,” it added.

By increasing its regasification capacity, Adriatic LNG will be able to make a greater contribution to meeting the country's natural gas needs as it will be able to cover around 12 percent of annual Italian consumption.

“We have reached an important milestone at a critical time for our country's energy security,” said Alfredo Balena, Director of Public of Government Affairs at Adriatic LNG.

“Increasing the capacity of our terminal represents for Italy and also for Europe a tangible way to increase and diversify LNG imports,” added Balena.

Adriatic LNG is capable of receiving almost all classes of LNG carriers, with a capacity ranging from 65,000 cubic metres up to 217,000 cubic metres capacity.

The increase in regasification capacity at the Adriatic terminal will be achieved through the optimisation of the operating conditions of the infrastructure, without any structural changes to the current configuration.

The eight supplying countries so far to the Adriatic facility have been Qatar, Angola, Egypt, Trinidad and Tobago, Equatorial Guinea, Norway, Nigeria and the US.

The chief executives of Italian energy company Eni and Algerian LNG, pipeline natural gas and oil group Sonatrach have signed an accord related to the North African nation’s onshore Berkine Basin.

Sonatrach CEO Toufik Hakkar and his Eni counterpart Claudio Descalzi, signed the deal in the presence of the Algerian Minister of Energy and Mines Mohamed Arkab and Italian Ambassador to Algeria Giovanni Pugliese.

“Eni and Sonatrach also signed a memorandum of understanding for cooperation on initiatives in the energy transition,” said a statement.

“The agreements are testimony to the commitment of Sonatrach and Eni to continue the shared strategy of accelerated project development,” said Eni CEO Descalzi.

The Algerian Government noted that the Berkine Basin contract was the first ever signed under the aegis of the new Algerian oil law and covers an area of 7,880 square kilometres in the southern part of the Berkine Basin, in close proximity to the company's current production assets.

More E&P

Descalzi and Hakkar stated that they shared the commitment to create an ambitious exploration and development programme in the area.

“In the first phase, the project envisages the fast-tracked development of reserves estimated at 135 million barrels of oil equivalent, with a start-up of production expected by the end of 2022,” it added.

“This project will enhance synergies with existing plants. The entry into force of the new contract is subject to approval by the competent Algerian authorities,” they stated.

Eni has been present in Algeria since 1981 and is the operator of various permits with an equity production in the country of 95,000 barrels of oil equivalent per day.

Eni also recently agreed earlier in December 2021 to sell a minority stake in two pipelines involved in transporting natural gas from Algeria to Italy for €385 million ($435M) to Italian LNG terminal and gas grid operator Snam.

Eni said that deal involved Snam purchasing a 49.9 percent stake in the onshore gas pipelines running from Algeria to the Tunisia border and the Tunisia coast (TTPC), and the offshore gas pipelines connecting the Tunisian coast to Italy (TMPC).

Eni said the transaction would create synergies in the respective areas of expertise in gas transport on a strategic route for the security of the natural gas supply to Italy.

Snam said the deal consolidated Snam’s central role in Italy’s security of supply as well as in energy transport from the Mediterranean region.

Snam operates the gas grid and the onshore Panigaglia facility in the northwest near Genoa as well as having a 49 percent stake in the LNG facility, the “FSRU Toscana”, which is deployed off the Italian west coast.

Italian energy company Eni has agreed to sell a minority stake in two pipelines involved in transporting natural gas from Algeria to Italy for €385 million ($435M) to Italian LNG terminal and gas grid operator Snam.