Spanish LNG imports seen robust in June amid export, storage demand: Enagas

Spanish LNG import volumes are set to remain robust in June, with shippers nominating 3.6 million cu m (25.2 TWh) of deliveries, up from 2.6 million cu m in the year-ago month, according to a schedule published April 27 by gas grid operator Enagas.

The strong LNG import schedule comes amid export opportunities to France and gas storage injection demand.

A total of 25 deliveries are expected in June, while two large-scale and two small-scale reloads are also lined up for export, the schedule showed.

The incoming volume is consistent with the average of the Winter 2021 season, when LNG intake volume averaged 25.9 TWh per month as Spain boosted LNG volume to make up for a halt in Algerian gas supply through the GME pipeline.

For Q2 to date, Spanish shippers have already boosted their import volumes above nominations, aided by a price discount to neighboring markets.

Spanish gas is currently among the cheapest in Europe thanks to its access to global LNG via its six operational LNG terminals and its pipeline imports from Algeria.

The PVB month-ahead price was assessed by S&P Global Commodity Insights on April 27 at Eur82/MWh ($86.38/MWh), a discount of Eur23.50/MWh to the TTF month-ahead price.

Spain is supplied with pipeline gas from Algeria via the 10.5 Bcm/year Medgaz pipeline, with deliveries currently running at some 26 million cu m/d, according to S&P Global data.

April imports

For April, LNG intake volume is expected to reach 4.5 million cu m, up from initial nominations of 3.2 million cu m, and likewise in May, with nominations increasing from an initial 3.2 million cu m to a current 4.2 million cu m.

June should see a continuation of gas and LNG exports from Spain as well as rising storage injections, according to the latest data.

Export volume via pipeline to France is initially nominated at 2.2 TWh for June, following from record levels of 5.0 TWh scheduled for May and 5.1 TWh for April.

The impact on border flows of an announced Eur50/MWh gas price cap for Spanish power generation has yet to be determined, however, as the market awaits more details from the Spanish government on how the mechanism might work.

On its other land border, Spain should also export 107 GWh to Portugal in June, flipping from a net importer in April and May.

As yet, no exports have been nominated as reverse flow from Spain on the GME pipeline to Morocco, with Spanish press reporting April 27 that the government may soon authorize Moroccan consumers to land tankers in Spain and flow the gas southward, opening for the first time an arbitrage from Europe to Africa.

In terms of LNG exports, two large and two small reloads are nominated for the month, including two 138,700 cu m cargoes sailing from Sagunto June 4 and from Barcelona June 19.

This follows on from two large reloads in April and two large and four small in May.

Storage injection

Spanish gas demand is seen at 23.2 TWh in June, as domestic demand moves into seasonal lows.

On the supply side, LNG sendout is seen at 19.5 TWh while net pipeline flows will be 5.4 TWh, with the Algerian Medgaz link flowing at around 80% of its full rate.

The excess volume will either remain stored in LNG tanks or be used to refill Spanish storage levels over Q2.

From a starting position of 20 TWh on April 1, Spain is seen boosting long-term storage stocks by 5.2 TWh across the three months, taking storage levels to 25.2 TWh, or 71% full, by the end of June.

Meanwhile, the level of LNG stored in tanks is also seen ticking up from an average of 12.4 TWh held in April to an average 17.6 TWh in May and 17.7 TWh in June, equivalent to 76% full.