Queues of LNG tankers off European coasts: no places to unload

Dozens of ships carrying liquefied natural gas (LNG) are circling off the coast of Spain in search of unloading slots. This prompted network operators to warn that they may have to stop uploading to deal with this extraordinary situation.

LNG ships are also at anchor near other European countries, which could mean dozens more are waiting, he told Reuters a source familiar with the situation.

Europe had to secure alternative supplies, including liquefied natural gas, but the arrival of multiple LNG cargoes exposed the lack of regasification capacity.

If the backlog is not caught up soon, these ships may start looking for alternative ports outside Europe to unload their cargo.

There are more than 35 LNG-laden vessels sailing off Spain and around the Mediterranean Sea, with at least eight anchored off the Gulf of Cadiz, traders, analysts and LNG terminal sources warned on Monday.

The lack of regasification plants and/or pipelines connecting countries that have such facilities to other European markets means that LNG floating at sea cannot be used. “We have seen a large number of cargoes waiting at sea in southern Spain or going around the Mediterranean, as well as those waiting outside the UK,” said Alex Frawley, an expert at analysis firm Independent Commodity Intelligence Services (ICIS).

Lower industrial demand from Europe’s slowing economy further complicates the situation; Spain in particular is expected to see lower domestic energy consumption due to unseasonably warm weather.

ICIS’s Frawley pointed to another reason for the congestion: natural gas prices are expected to rise as winter approaches, so some ships are waiting for better conditions to offset the extra transportation costs incurred by being at sea.

Operators at the largest LNG regasification plant in Europe – Enagas, in Barcelona

Photo: AP/BTA

The price of an LNG cargo delivered in late November or early December is about $2/mmBtu higher than current prices.

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