The Spanish government is seeking to increase by 30% the third-party access (TPA) charges associated with carrying out LNG reloads from terminals in the country, according to a statement by Spanish energy regulator CNE in which it backed the proposals.
The government is seeking to raise by 30% both the fixed and the variable third-party costs of reloading. It has already increased reload costs twice since December 2011 (see ESGM 30 April 2012). Regasification costs are not under consideration for revision.
At present, third-party access charges to reload from a Spanish LNG terminal are defined as a fixed rate of E171,153 and an additional variable rate of E1.513/MWh.
An increase such as this would swell the fixed rate charge to E222,499 and the variable rate to E1.967/MWh. Based on a standard 900GWh vessel, this would take the cost of reloading from around E1.53m to around E1.99m, ICIS calculates.
"The CNE considers that the increased cost to the Spanish gas system that the proliferation of reload operations represents should justify the increase in reload access charges," the document said.
A source at the CNE told ICIS that the increase was necessary because the charges associated with reloading LNG out of Spanish ports does not cover the real cost of the operations, and this is a familiar complaint from LNG plant operators too. Reloads have surged this year, driven by higher prices attainable in international markets and a tightness of shipping.
In the year to the end of May 2012, Spain reloaded 17 vessels with 10.4TWh of gas out of Cartagena, Huelva and Ferrol, the three ports currently able to execute reloads. This compares with seven bearing just 2TWh over the same period in 2011, according to data from Spanish gas grid operator, Enagás.
Despite the high cost of carrying out reloads, the expense has apparently so far been justified by the rewards available in Asia and South America. It is not clear at this stage what impact a 30% rise would have, but it is likely to be significant.
One source predicted that the TPA charge hike could have the effect of cutting speculative reloads, but was unlikely to deter market participants carrying out the operation to circumvent destination clauses on their long-term LNG contracts. RS
Copyright 2012 Heren Energy Ltd. All Rights Reserved.
(Originally published June 22, 2012, in European Spot Gas Markets.)