European LNG slot prices decline alongside rising natural gas inventories
LNG terminal slots into Belgium, Italy and Spain have been reported sold at significantly lower prices than in May and April after the maintenance season and alongside rising European storage levels.
The Fluxys LNG terminal in Zeebrugge, Belgium, auctioned a July 6 slot around $1.50/MMBtu, according to a market source. Another sources said a Zeebrugge auction from early June sold for around $4.88 million, around $1/MMBtu. The terminal counts a 9 Bcm/year regasification capacity and is the only LNG regasification facility in the country. These prices show significant reductions from Zeebrugge’s slot price reported in May. A Zeebrugge slot auction for June 7 that occurred May 6 was previously heard awarded at $25 million to $27 million, according to several Europe-based traders. Another Zeebrugge slot for June 13 was previously heard awarded at around $20.75 million.
In the Mediterranean, a slot auction took place recently in Spain for July-August that went for around $2.12 million, or 60 USD cents/ MMBtu, a market source said. That is lower than a previous auction at $5.19 million, which occurred toward the end of April for June deliveries. In Italy, Adriatic LNG operates the country’s largest regasification capacity at 9 Bcm/year. It announced an auction June 7 for slots throughout October 2022 to December 2047.
A source reported the Adriatic LNG Auction saw bids start at 30 cents/MMBtu but expects slots to be sold with prices of “at least” $3/ MMBtu. Another auction took place in Italy June 10 at the OLT Toscana LNG Terminal, a 3.75 Bcm/year regasification facility. The auction concluded awarding 100% of its capacity from October 2022 to September 2023 and 83% of its capacity for the period spanning October 2023 to September 2026.
There could be several factors driving the drop.
The high slot prices heard in May and April could be partially attributed to a limited number of slots available for June, as the month has traditionally been used for maintenance work at regasification facilities. For example, all four LNG import terminals in France saw periods of 100% reduction recently. Fos Cavou from May 30 to June 20, according to S&P Global Commodity Insights data. Fos Tonkin is expected to see the same reduction from June 18 to June 26. Dunkerque has planned maintenance on dates between June 1 and 29. Montoir LNG has planned maintenance from June 18 to July 1.
The reported slot prices have weakened as inventories have grown. May inventories were around 34%, according to Gas Infrastructure Europe (GIE). Sources said there was pressure to refill gas inventories as quickly as possible to meet storage targets even it meant paying
higher prices. According to GIE data, European gas inventories were at more than 55% June 20, the latest reading.