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increase Grain LNG’s total site storage to 1.2mn cubic metres and total regasification capacity to around 780 GWh per day, which the company said would be equivalent to 32% of the UK’s gas demand. “By optimising existing assets, Grain LNG expects to be able to offer market partici- pants flexible and competitively priced capacity,” it said.
“Grain already has the largest storage tanks in Europe, which offer our customers the flexi- bility to store their LNG and optimise send-out in response to market prices,” Grain LNG’s com- mercial manager, Nicola Duffin, said earlier this year, when the terminal first announced that it would be offering up future capacity. “With the expansion of Grain we will further optimise our existing assets, which means we’ll be able to be more competitive than typical new-build capacity.”
Grain LNG benefits from direct access to the UK’s National Balancing Point (NBP) trading hub, which has historically drawn cus- tomers to capacity at the terminal. The oper- ator is also hoping that its proximity to other European gas hubs will now help it attract new customers.
This comes as LNG imports into Europe were recently reported to have tripled in the 10 months up to August 2019. The trend is antic- ipated to continue, with Germany set to bring four new LNG import terminals online over the coming years, while the European Union is back- ing other proposals in Croatia, Greece, Ireland, Poland and Spain. The EU is working to increase
LNG imports up to 283bn cubic feet (8bn cubic metres) per year by 2023, which would be more than double the amount imported in 2018.
This push – if the market supports it – could benefit LNG import terminals including Grain.
What next?
The UK’s Business Leader outlet reported this week that law firm Shakespeare Martineau had helped to develop the access rules and other commercial arrangements on which the new capacity at Grain LNG would be offered.
“This is a milestone for Grain LNG and is a significant moment for the UK’s energy market,” Shakespeare Martineau’s senior partner and head of energy, Andrew Whitehead, was quoted by Business Leader as saying. “LNG will remain an essential part of the country’s energy mix for many years to come, so it is paramount that we continue to increase capacity wherever possible, improving diversity of supply and strengthening the UK’s position as a global gas hub.”
Whether Grain LNG is right to be confident over new interest in taking on capacity at the ter- minal will be confirmed a few months from now. While customers could be keen to secure capac- ity for future years, it seems likely that the pack- age user option will prove more popular than the base user option, given the market’s shift away from long-term contracts. This is a trend that is expected to keep playing out globally, as many long-term contracts expire, amid expectations that they will be replaced by shorter timeframes in many cases.™
The availability of the package user option illustrates the broader move away from long- term contracts in the LNG market.
Grain LNG is hoping that its proximity to European gas hubs will now help it attract new customers.
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