In December of 1970 the first LNG “satellite” facility was commissioned in north east Spain, in a village close to the French border, inaugurating the “small scale” business in the Iberian Peninsula. Since then, more than half a million trucks have been loaded at the LNG import facilities and downloaded in hundreds of satellites LNG plants.
The business model of large LNG regasification terminals has been traditionally based on the reception, unload, storage, and regasification of LNG to be delivered to customers through the gas networks. However, during the last years, besides usual large LNG services, Europe LNG infrastructure players have been adapting their business models and introducing new technology solutions to respond to the increased relevance of Small – Mid Scale LNG services. These services refer to:
- the breaking bulk or distribution of LNG (via small ships or truckloading) from the main import terminals to smaller regasification terminals, satellite plants or directly to customers located throughout the EU.
- the use of LNG as a fuel for heavy transport (trucking, bunkering, etc.) due to its superior environmental and economic performance compared to other fossil fuels.
Although the Small-Mid Scale LNG business is experiencing a significant development in the last years, future growth in the EU crucially depends on many factors, such as a more favourable regulation. Pricing, taxation, environmental rules, infrastructure availability and the commitment of the industry are also key factors.
From a regulatory perspective, the EU is taking action to promote the use of LNG for mobility. The EU Directive on the deployment of alternative fuels infrastructure 2014/94/EU requires Member States to ensure an appropriate number of LNG refuelling points (that meet common standards) for maritime ports, inland waterway transport as well as heavy duty vehicles across the TEN-T Core Network.
The Spanish Case: Enagás is a clear example of how LNG terminals have switched from a traditional model to a LNG multimodal terminal. With more than 4 decades of experience in the “small scale” use of LNG, the adaptation to more demanding market needs required Enagás to face a number of technical challenges with innovative solutions regarding the management model, maximizing efficiency at existing assets, and adding efficiency to the classical value chain integrating new logistic services.
These new logistic services were developed right in time as the Iberian spot market started to develop, contributing to the creation of a liquid gas hub in the Iberian Peninsula and taking advantage of the resulting transparent price formation in the market.
Spain is also an excellent example of LNG truck loading with destinations not only inside the country but also abroad. In 2015 Spain represented around 85% of total LNG truck loading traffic in the EU.
Furthermore, in 2016 the European Commission chose the CORE LNGas hive initiative, among the projects submitted for the tender called by the Connect Europe Facility (CEF) for the development of the Trans-European Transport Networks, and will receive financial support of €16.5Mn from the European Commission. The total investment in the project will amount to €33Mn.
The project, coordinated by Enagás, involves 42 partner entities in Spain and Portugal: 8 state-owned institutions, 13 port authorities and 21 industrial companies such as LNG operators, shipbuilders, regasification companies and other partners. Its execution is planned to last until 2020 and will put forward a National Action Framework for the use of LNG as maritime fuel in Spain.
The aim of the project is to develop a safe and efficient, integrated logistics and supply chain for LNG in the transport industry, particularly for the maritime transport around the Iberian Peninsula and the implementation of the Clean Transport Directive.
With 8 regasification plants, the Iberian Peninsula is geostrategically positioned and possesses a sound LNG logistics know-how, which is key to the consolidation of the region’s leadership in this field.