EEMSHAVEN | YOUR NEXT LNG LOCATION
THE GLOBAL LNG MARKET
Global supply of LNG will dramatically expand over the next few years, mainly resulting from gas production increases in the US and Australia. This likely results in an oversupply of available LNG. The anticipated drop in LNG prices presents an opportunity for Europe to diversify its import portfolio. Therefore, LNG may become more competitive with pipeline gas. Further, as a global commodity, LNG offers an increase in gas security of supply, which is currently one of Europe’s main concerns.
THE EU MARKET SITUATION
Stable and abundant energy supply
The EU imports more than half of all the energy it consumes; 66% of its natural gas is currently imported. Gas imports will increase even more due to declining indigenous gas production. Many European countries heavily rely on a single supplier for their natural gas. This dependency leaves them vulnerable to supply disruptions.
In response to this, the European Commission released its Energy Security Strategy in May 2014. The strategy aims at ensuring a stable and abundant supply of energy for European citizens and the economy. The main pillars of EU policy related to gas supply and LNG infrastructure are:
- Increasing energy production in the EU and diversifying supplier countries and routes.
- Completing the internal energy market and building missing infrastructure links to quickly respond to supply disruptions and redirect energy across the EU.
Diversify gas supply routes to EU
Historically Russia, Norway, and North-Africa supplied most of Europe’s gas demand through long distance pipelines. In addition to gas supply originating at the borders of Europe, indigenous European gas production supplied a significant share of demand, notably the Netherlands and the United Kingdom. However, indigenous production steeply declined over the last years and continues to do so. This increases the import dependency of Europe even further.
Moreover, many long-term gas (pipeline) import contracts are expiring. Russian long-term contracted volumes will remain relatively stable up to 2030. Long- term contracted gas volumes from Azerbaijan, Libya, Algeria and Norway will phase-out in the next 15 years.
Although it is expected that some long-term contracts will be renegotiated, it is likely that gas can be sourced from other means, either through pipeline or by LNG. The price of LNG will likely become competitive as US and Australian liquefied gas enters the global gas market.
Secure gas supply for Northwest Europe
Northwest EU countries are frontrunners in their efforts to liberalize their natural gas market. This resulted in highly interconnected transmission networks and liquid trading places.
The Netherlands’ gas market will see major changes in the next decade. The country will become a net gas importer by 2017. Besides, due to the declining production of the Groningen field, gas exports to Belgium, France, and Germany will decline and eventually end in 2030.
Germany – one of the largest gas importers in EU, with 2015 imports amounting to ~85% of demand – will have to find new gas sources to offset the gap between demand and domestic supply. Germany’s gas providers and governmental bodies are taking measures to secure stable and sufficient gas supply. These include access to LNG, which can e.g. be secured through Belgium, the Netherlands or other EU countries. The German energy market appears as one of the most interesting for LNG development in the next years.
Natural gas, the most environmentally friendly fossil fuel, is likely to play a central role in the future European energy mix, in a context of low gas prices, renegotiation of long-term gas supply contracts, the search for security of supply and an anticipated abundance of global gas sources. This will of course result in a challenging scenario with plenty of opportunities. The Netherlands, and specifically Eemshaven port, are very well positioned to take full advantage of these future opportunities, based on:
its leading role in Europe as liquid trading market for natural gas;
its well-connected gas infrastructure with other European countries;
In particular, Eemshaven port can play a strategic role. Eemshaven port is an industrial and commercial deep sea port in the Groningen region, operated by Groningen Seaports (GSP). Given the promising LNG market outlook described above, GSP is considering the development of a large scale LNG regasification terminal in Eemshaven.
An LNG terminal located in Eemshaven would take full advantage of the:
- Energy port: Eemshaven is an existing energy port harboring major electricity and gas interconnections, power plants, and offshore wind. Nearby industries may allow for heating and cooling synergies with LNG.
- Availability: Two dedicated port areas are available for a large-scale terminal. Different configurations are possible for the LNG terminal.
- Suitability of its location: GSP conducted preliminary feasibility studies, receiving the green light and support from Dutch authorities.
- Strategic position: Immediately located next to the main transmission grid in the Netherlands with direct existing connections to Germany and wider Europe.
- Expertise and experience: Northern Netherlands locates a major cluster of gas related industries, services and expertise.
ROBERT VAN TUINEN
business manager energy- & dataport
Phone: +31 (0)62 224 3300