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Italian LNG sendout hits record high in June

04 Jul 2017 17:40 (+01:00 GMT)
Italian LNG sendout hits record high in June

London, 4 July (Argus) — Italy's LNG sendout reached a record high in June as the country's PSV hub became one of the premium global markets and deliveries under the LNG storage service increased from a year earlier.

Aggregate Italian sendout was 31.2mn m³/d in June, up from 23.4mn m³/d a year earlier and the previous peak of 27.6mn m³/d in May.

The record sendout was partly the result of deliveries under Italy's LNG storage and regasification service, which was launched in 2015 but received no commercial interest in the first year of operation.

The OLT terminal regasified 7mn m³/d in June, up from 2.5mn m³/d a year earlier, which was all for injections under the service. And about half of the 2.6mn m³/d sendout from the Panigaglia terminal was related to the service.

Excluding deliveries related to the LNG storage and regasification service, sendout was 22.9mn m³/d in June, up from 20.9mn m³/d a year earlier and the highest for the month since June 2011.

PSV front-month prices climbed above traditional premium markets in northeast Asia in May, which may have encouraged strong deliveries by firms holding long-term regasification capacity at Italian terminals. High variable costs for short-term bookings discourage firms that do not hold long-term capacity from bringing cargoes to Italy.

Firms holding long-term capacity consider most costs to be incurred already, and PSV prices would only need to be at a premium to northeast Asian prices wide enough to cover variable costs of €0.51/MWh to encourage the delivery of cargoes to Italy.

BP — a long-term capacity holder at Adriatic LNG — delivered a Nigerian cargo on 13 June. The terminal mostly receives deliveries under a long-term contract for Qatar's Rasgas to supply Italian firm Edison, but BP also brought in a cargo in April.

Sendout from the Adriatic terminal in June was broadly in line with the same month in 2011, when sendout from the terminal was at it highest. Receipts fell from the second half of 2011 because of strong Japanese demand after the country's nuclear plants were halted following the Fukushima disaster, which drew LNG away from Europe.

Italian sendout over the whole of 2017 is on course to be higher than in recent years, unless deliveries slow in the second half of this year.

Regasification tumbled to as low as 12.2mn m³/d in 2014 from a peak of 19.3mn m³/d in 2010-11, before rebounding to 15.8mn m³/d in 2015-16.

Global liquefaction capacity has increased steadily in recent years, although this has largely been offset by rising demand in premium markets such as China, India and Egypt. But European LNG sendout has increased so far this summer as global supply appears to have begun to outpace demand growth in premium markets.

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Italy LNG storage and regasification service
DateTerminal Delivery (m³ of LNG)*Storage (mn m³)*Confirmation deadlineVessel Origin
8 Apr 17OLT138,63183.2Delivered DukhanQatar
19 Apr 17OLT141,31684.8Delivered Arctic DiscovererNorway
28 Apr 17OLT140,00084.0Cancelled
4 May 17Panigaglia 67,80040.7Delivered Cheikh BouamamaAlgeria
6 May 17OLT 140,00084.0Cancelled
14 May 17OLT 142,83485.7Delivered EjnanQatar
22 May 17OLT 140,00084.0Cancelled
30 May 17OLT 140,00084.0Cancelled
31 May 17OLT144,48988.3Delivered†Lalla Fatma N'soumerAlgeria
14 Jun 17Panigaglia 67,70040.6DeliveredCheikh BouamamaAlgeria
18 Jun 17OLT144,48988.3DeliveredLalla Fatma N'soumerAlgeria
27 Jun 17OLT136,50683.4DeliveredArctic AuroraUS
6 Jul 17OLT136,70083.5ConfirmedCastillo de VillalbaTrinidad and Tobago
22 Jul 17OLT136,70083.5Confirmed
7 Aug 17OLT151,70091.0Cancelled
23 Aug 17OLT131,70079.0Confirmed
9 Sep 17OLT131,70079.0Confirmed
18 Sep 17OLT66,50039.9Cancelled
*estimated †initially planned for 8 June

Italian LNG sendout mn m³/d

PSV front-month at premium to northeast Asia €/MWh