Spain profits from reselling LNG

Bloomberg/Fuel Fix:

Spain overtook Norway in March to become the region’s biggest exporter of liquefied natural gas. The southern European nation has never produced any of the fuel.

The twist is a consequence of the crisis that left more than a quarter of Spain’s workers unemployed as the economy weakened for nine straight quarters. Utilities that contracted to buy LNG before the slump are now contending with a sixth consecutive year of diminishing domestic demand, spurring them to re-export cargoes.

The trade is being underpinned by prices in Asia and South America that are about 30 percent higher than in Europe. Japan is importing more after shutting down its nuclear power plantsfollowing the Fukushima disaster in 2011. South American nations are accelerating purchases after a drought in Brazil limited the supply of hydroelectric power and cold snaps in the U.S. curbed pipeline flows to Mexico.

“It doesn’t make much sense to bring a cargo into the terminal, unload it and then put it back on the ship and send it somewhere else,” Andy Flower, a former BP Plc executive who’s now an independent LNG consultant based in Caterham, England, said yesterday by phone. “Reloads are a crazy way for business to behave but it’s the reality of the LNG business.”

LNG for delivery to northeast Asia cost on average $16.65 a million British thermal units over the past year and reached a record $19.70 in February, according to assessments by World Gas Intelligence for spot cargoes for delivery in six to eight weeks. That compares with $12.81 in southwest Europe.

Spanish buyers including Iberdrola SA and Endesa SA are obliged to buy LNG volumes under their long-term contracts, most of which have so-called destination clauses, meaning the cargoes can’t be diverted at sea.

Spain dispatched seven loaded LNG tankers from its import terminals in March, according to Enagas SA (ENG), the Madrid-based network operator. That compares with five from Norway’s Hammerfest, Europe’s only plant that turns natural gas into a liquid by freezing it to minus 162 degrees Centigrade (minus 260 Fahrenheit), ship-tracking data compiled by Bloomberg show.
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This certainly shows the opportunities for the sale of LNG worldwide.  The US needs to break though the barriers set up by regulators and the anti energy left to participate in this market.  If Spain can make a profit as a middleman, clearly direct sales would be even more profitable of US companies.