Spain boosts LNG imports to cover for loss of hydroelectric power
Spain is importing near-record levels of liquefied natural gas as persistent heat boosts air conditioning demand for electricity and depletes the amount of water available for hydropower generation. With global prices for LNG near their lowest in three years, traders may also be betting on a recovery by filling up storage sites in the nation, which account for almost a third of Europe’s total capacity. Shippers are continuing to buy gas despite the tanks being almost full.
It’s another example of how gas storage tanks are filling up across the continent to reach peak levels way before heating demand kicks in. That leaves a bigger-than-usual buffer for potential shocks in the winter, increases trading opportunities for when prices rise and raises questions about whether Europe can absorb all the gas that’s flowing in.
Spanish gas demand increased 43 percent in the first 19 days of this month, compared with the same period last year. That’s in part due to above-normal temperatures this summer and hydropower reserves about 17 percent below their 10-year median. Lower spot LNG prices allowed Spain to boost gas power use, contributing to considerable coal-to-gas switching. A lot of the increase in LNG imports was due to more cargoes from Russia, which has grabbed a 6 percent share of Spain’s total gas supply.