The LNG market experienced a year of strong growth in 2017, with global imports reaching 289.8 MT and new liquefaction capacity coming online in various parts of the world, as stated by GIIGNL in its annual report. This was felt by the enthusiasm among the 27,000 international attendees of the Gastech 2018 in Barcelona.
Among the various subjects presented at Gastech, one of the most addressed was the pursuit of enhanced flexibility both in terms of destination and pricing by international buyers. In fact, contractual flexibility represents an important optimisation lever for large portfolio players. However, it is not the only contribution of LNG to gas markets; LNG can also play an important role in the balancing of the national gas system.
In a country like Italy, for example, different from other European countries, where underground storage sites are in most cases depleted fields, the modulation profile is generally rigid as their geological characteristics are not suitable for elevated modulation. As a result, current storage services do not satisfy market requirements for flexibility as reflected in the poor results of the storage auction price.
LNG can help a gas system like the Italian one in various ways:
In 2013, an LNG peak shaving was introduced in Italy by the National Authority (provision number 471/13) together with the Ministry of Economic Development (MiSE) with the objective of ensuring the security of supply of the Italian national gas system during the winter. A certain quantity of LNG, typically 70.000 cubic meters, is discharged and then stored in the tanks of the terminal from January 1st until March 31st. In case of emergency, this service allows the TSO to regasify the LNG previously stored. As an example, in February 2018, following the activation by the MiSE of the state of early warning, given the low temperature across the country, as well as, the reduced transport capacity on the TENP pipeline, the peak shaving gas stored in the OLT terminal was regasified at a rate of 10-15 Mmc/day to help the system match the significantly high gas demand.
On the other hand, an LNG terminal can offer flexibility to its users of regasification service to change – either increasing or decreasing – their own gas redelivery schedule. Users can thereby adapt their schedule to match working day versus weekend demand or to compensate for unexpected events in their supply. Nowadays, in Italy, this type of service is offered by various LNG terminals, mainly on the day ahead basis but, recently, also in intraday. In this second case, the service aims at complementing the nomination made by users the day before the gas day with the flexibility of same day delivery.
The intraday service was introduced in Italy in 2016, at the same time a new gas balancing system took effect (following the Eu directive 412/13) that forces users to balance their position.
In this article from what I have mentioned, the innovative services already available to the market, considering the role that gas will have in the future energy mix, as well as the expected growth of LNG, it is possible to assert that we are only at the beginning of a path versus an increase in the competitiveness and safety of gas systems.
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