Dozens of LNG freighters are drifting off the Spanish coast because they can’t find a slot to unload. The gas network operator Enagas speaks of overcapacity. Ships with liquid gas are also said to be anchored near other European countries.
Dozens of ships with liquefied natural gas (LNG), which is in great demand in Europe due to the lack of Russian energy supplies, are dammed up off the Spanish coast. The reason: You can’t find a place to unload. If the backlog isn’t cleared soon, these ships could look to alternative ports outside of Europe to offload their cargo, experts warn.
More than 35 ships loaded with LNG are adrift off Spain and in the Mediterranean Sea, traders, analysts and LNG terminal workers familiar with the situation told Reuters. Spain is only offering six of the coveted slots at its terminals this week, an insider said. The country has a total of six terminals.
In a statement released late Monday evening, titled “Declaration of an exceptional operational situation,” Spanish gas network operator Enagas stressed that it may have to turn back LNG cargoes due to overcapacity. The high utilization is expected to last at least until the first week of November. The liquid gas can be pumped out of the transport ships at the plants, turned into gaseous form again by heating and then fed into the gas network.
In addition, LNG ships are anchored near other European countries. That could indicate dozens more ships are waiting, an insider said. “We have seen large numbers of cargoes waiting off the coast of southern Spain or circling in the Mediterranean Sea,” said Alex Froley, LNG analyst at data analysis firm ICIS.
“Also some charges are holding out in front of the UK.” This may also be due to the fact that some ships are waiting to sell their cargo at a higher price before the start of the heating season. “This strategy works in part because some companies have flexibility in their shipping portfolios due to outages like the closure of the US Freeport facility,” Froley said, referring to the second-largest US exporter of LNG, which collapsed in June after an explosion and a Brand ceased operations.
Spain has the largest regasification capacities in the European Union: they account for a third of all LNG and 44 percent of LNG storage capacity. Germany currently has no LNG terminals of its own. In the coming winter, two floating LNG plants in Wilhelmshaven and Brunsbüttel should be ready for use to import liquid gas into the German gas network. Together they have an annual capacity of up to 12.5 billion cubic meters. Two more of these systems could be used in Stade and Lubmin, which, like the first, could later be replaced by fixed LNG terminals.