International trading companies choose these days to place in the Spanish gas system a volume of liquefied natural gas (LNG) equivalent to the load of more than 500 methane vessels (each has a capacity of almost 1 TWh) for the next 12 months According to sources in the sector, this amount represents more than double the demand for LNG expected in the national market in one year: 250 TWh, to which we must add more than 100 TWh of the non-liquefied gas that will pass through the two international pipelines that They originate in Algeria: those of Medgaz and Maghreb.
These days, the pipeline network manager, Enagás, is preparing the slot allocation for the next fiscal year, which begins next April and ends in February 2021 and is granted in two phases. In Enagás they recognize that it is an “extraordinary” demand , but they do not reveal the data because they are confidential.
This reserve demand for the discharge of LNG in the six Spanish regasification companies is considered “good news”, according to some sources, for security of supply and for consumers who benefit from low natural gas prices, which fell by 16 % in 2019 and now stands at 10 euros MWh (Henry Hub). But not so much for wholesale companies.
Among the reasons for the avalanche of petitions is the stalemate in the demand for gas in Asia, and particularly in China, due to the effects of the coronavirus epidemic. Also of the growing production of the United States, which, after the use of fracking techniques, has become an exporter of a fuel that until recently was an importer.
For the first time, Enagás is making the reserve allocation in accordance with the provisions of CNMC regulation 8/2019 that regulates access to the gas system (one of the 12 approved by the regulator so far). Thus, last week, the technical manager of the system began the process of assigning slots for the discharge of methane vessels from April of this year to February of next year in the regasification plants.
According to the new regulations, the allocation is made for two semiannual periods: between April and September of this year, where there are priority slots for traders with contracts in force and between next October and February 2021, where there are no priority slots . After the mandatory analyzes, Enagás will announce this week the reserve allocation for the first period and next week, it would publish the result of the second period.
Although the system has capacity for all that influx of gas, it is the demand that will not assume it. However, an expert recalls, one issue is the reservation to download and another is the actual download, whose deadlines are shorter.
Prices down
The collapse of natural gas prices is causing the suspension of many take or pay contracts maintained by marketers. And it is that they find it more profitable to pay the toll of the waiver and buy the gas in the spo t market.
Another effect is the depreciation of the exploration and production assets (upstream) of many companies, as in the case of Repsol, which has had gross provisions for 6,100 million, which led to losses of 3,816 million euros per year. gone through the fall in prices of hydrocarbons (crude and natural gas).
In the case of Spain, according to business sources, the six regasifiers of the system managed by Enagás are 100% of their gas storage capacity (these plants can also be used as warehouses, as well as the pipes themselves). A collection of fuel by companies, which are waiting for a price increase to sell the gas.
Consumption rose 14% last year
In 2019, the demand for natural gas in Spain grew by 14% and stood at 398 TWh, the highest figure since 2010. According to Enagás data, this increase was mainly motivated by the growth in demand for electricity generation, more of 80%, since the gas occupied the gap left by the stopped coal plants, and the consumption of the industry, which rose 2% and represents about 60% of the total demand (214 TWh).
By 2020, the technical manager of the system expects that the demand will remain at 390 TWh, "because it is difficult for it to rise again," said the president of Enagás, Antonio Llardén in the presentation of the company's results. The drop in prices will again have beneficial effects on the price of electricity, since gas (already without coal) marks the marginal price of the wholesale market.
One of the reasons for the fall in gas prices is the decoupling of their prices from those of crude oil, which so far acted as a reference for the commercialized gas. Thus, while the price of this hydrocarbon has fallen a lot in Europe, that of oil remains constant.
