LNG supplies to Europe can increasingly be diverted into storage in the summer, giving storage operators the ability to then release the gas in the higher-demand winter months, the head of Italian TSO Snam said Wednesday.
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Speaking at FT Commodities Global Summit in Lausanne, Switzerland, Snam CEO Marco Alvera said LNG would become "hugely seasonal" and that Italy in particular could take advantage of these market dynamics.
LNG, he said, is likely to play a key role in gas supply into Europe but "will need to be tied into storage."
"Europe has a huge opportunity in storage," Alvera, who is also a director on the board of S&P Global, said.
"LNG is going to become hugely seasonal," he said, adding that the majority of LNG demand is in the northern hemisphere.
"You will have very distressed LNG available in the summer and people will capture that if they have storage," Alvera said.
Alvera said Italy in particular could play an important role in importing LNG for seasonal storage.
"Italy is in a unique position for gas storage reserves and ability to export gas," he said.
"It can really be the hub where people import LNG in the summer and export it out to the rest of Europe in the winter."
Italy has a current gas storage capacity of some 16.5 Bcm, second only to Germany in terms of size within the EU.
Italy is already moving toward a joint LNG import and storage strategy.
OLT Offshore, the operator of the Toscana LNG import facility, awarded 16 unloading slots earlier this month as part of a bundled storage and regasification capacity procedure for the 2017/2018 storage year.
OLT said it would allocate three LNG unloading slots in April, four in May, three in June, two in July, two in August and two in September.
The total LNG to be imported under the tender is equivalent to about 1.3 Bcm, which will be sent to the Stogit storage system.
As a result, Platts Analytics' Eclipse Energy expects LNG send-out in Italy to be up 10 million cu m/d year-on-year this summer.
Europe as a whole is expected to import more LNG in 2017 given a boost in global LNG production capacity and relatively low prices.
According to data released this week by LNG industry group GIIGNL, European net imports of LNG totaled 38.5 million mt last year, up just 2.4% year on year.
It represented 15% of the global import total of 264 million mt, which was up 7.5% year on year.
Of that, the majority -- 160 million mt, or 61% -- was bought by countries in northeast Asia (Japan, South Korea, China and Taiwan).
Alvera also said Europe's gas market was becoming increasingly interconnected -- a goal of the EU Energy Union -- which would improve the efficiency of the transmission system.
"We need to interconnect France and Spain, reverse flow out of Italy, [provide] additional storage and LNG and you've achieved the Energy Union," he said.
Properly connecting Turkey to the European gas system would result in "the world's largest interconnected market," he said.
The drive to create interconnections and create harmonization would ultimately bring gas prices down to the benefit of consumers.
But, he said, the greater efficiencies of the Energy Union would "take some trading margins out of the system."
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