Bunkering and other Small-Scale Services
Most LNG that is unloaded at Europe ’ s LNG import terminals is still regasified at the import terminal and sent into a natural gas pipeline network in gaseous form . “ Small – scale LNG ” is a generic name to cover activities where LNG that is unloaded at an import terminal leaves the terminal still in its liquefied form . These activities are :
• Bunkering : smaller quantities of LNG are reloaded onto LNG-fuelled ships . As stringent environmental regulations are imposed on the maritime sector – notably the 0.5 % sulphur cap adopted by the International Maritime Organization ( IMO ) – an increasing number of ships are using LNG as a fuel . Bunkering LNG vessels are smaller than traditional large-scale LNG vessels and are sometimes able to access inland waterways to expand the geographic availability of small-scale LNG onshore .
• Truck transportation : LNG is transported by trucks from LNG terminals with truck loading bays . LNG is trucked ( i ) for use by industrial consumers who are not connected to a natural gas network , ( ii ) for power generation in isolated areas , ( iii ) as a supply source to a satellite regasification plant that injects gas into a local network ; and ( iv ) to supply LNG fuelling stations . LNG has potential to replace heavy fuel oil and diesel in heavy duty vehicles .
• Rail transportation : transportation of LNG by rail car is still in its infancy in Europe . Like trucks , transportation of LNG by railcars offers a means to expand the availability of LNG geographically . Rail loading services commenced at the Zeebrugge import terminal in Belgium in September 2020 .
The small-scale LNG market in Europe has grown by approximately 5 % per year over the last ten years , and is predicted to grow by a further 17 % between 2020 and 2025 – driven by price competitiveness compared to oil , incremental small-scale infrastructure and environmental advantages . LNG truck loading is the fastest growing of the small-scale LNG segments . The number of LNG trucks in Europe has increased from approximately 1,500 in 2016 to approximately 15,000 in 2020 , and there are now about 300 LNG fuelling stations in operation in Europe . As of July 2021 , 16 European LNG terminals offer truck loading services , and truck loading infrastructure is under development in a number of other terminals in Europe . Small-scale LNG service contracts remain diversified with different participants offering different contractual structures . However , we are beginning to see some harmonisation across small-scale LNG service contracts as the sector grows . Truck loading services can be contracted on a short-term or long-term basis . In May
2021 , GIIGNL published the first edition of Safety Measures for Truck Loading , Unloading and Road Transport of LNG – another step towards harmonisation of the LNG truck loading sector .
Coal to Gas Switching
In our 2020 Report we noted how some European countries ( such as Poland and Germany ) are phasing out coal fired power generation due to coal ’ s high carbon intensity . Since then the economics of coal-to-gas switching have further boosted the trend to switch to gas-fired power generation – including from regasified LNG . Between November 2020 and June 2021 carbon and coal prices have increased by 33 % and 26 % respectively , making gas more competitive financially and extending the move to gas-fired power generation . The increase in coal prices has in turn boosted European gas prices , making Europe an attractive market for LNG suppliers .
Competition with Pipeline Gas
LNG deliveries into Europe have always had to compete with the abundant supply of pipeline gas to the continent – largely from Russia but also from Norway , Algeria and Azerbaijan . That competition is set to continue .
The Nord Stream 2 pipeline – which will transport Russian gas to Germany ( and thereby into North Western Europe ’ s gas markets ) – is expected to be commissioned during the winter of 2021 / 2022 , and to be operational in the first quarter of 2022 . The influx of additional pipeline gas into Europe may affect European gas prices , and consequently the supply / demand profile for bringing LNG cargoes into Europe .
2020 marked the completion of the TAP ( Trans Adriatic Pipeline ) – the last section of the Southern Gas Corridor . The route allows gas from the Shah Deniz gas field in Azerbaijan ’ s sector of the Caspian Sea to flow into Turkey , Bulgaria , Greece and finally Italy . TAP runs from Greece to Italy via Albania and the Adriatic Sea . The influx of gas into these countries via the TAP pipeline has caused a decline in demand for LNG in Southeast Europe .
US LNG in Europe
The US was Europe ’ s top supplier of LNG in Q1 2021 , beating Qatar and Russia into second and third place , respectively . US global exports have surged by 42 % in H1 2021 in comparison to 2020 , according to the US Energy Information Administration ( EIA ), with Europe accounting bracewell . com