The diplomatic crisis with Morocco has altered the supply of gas from Algeria to Spain. Algeria will prioritize political and geostrategic reasons over economic ones and this Sunday will abandon gas supply through the Maghreb Europe Gas Pipeline (GME) despite Spain’s efforts to keep a key energy infrastructure active, with guarantees for contracts already signed. but uncertainty about futures. Thus, part of the gas supply to Spain will come in the form of liquefied natural gas (LNG), which will arrive in LNG tankers.
These are vessels expressly designed to transport LNG from production sites to consumption sites, which represents a real technological challenge, since the gas must be kept at a temperature of -160 degrees, close to absolute zero, at over great distances.
The objective of processing this mixture of hydrocarbons to make it liquid is none other than to facilitate its transport, and that is that, explains the technical manager of the gas system, Enagás, it occupies six hundred times less than natural gas in a gaseous state.
This is a LNG carrier
According to the Energy Agency of the Basque Government, one of the characteristics of a LNG carrier is its great draft and load capacity, necessary for the transport of large quantities of gas. The typical length (or length) would exceed 284 meters, and the beam (or width) would be 42.5 meters.
Naturgy, a 49% shareholder of the Medgaz gas pipeline, has more than a dozen vessels with an average capacity of almost 165,000 cubic meters, which travel the globe at an average speed of 18-19 knots. By total capacity, the “Castillo de Mérida” stands out with 178,818 cubic meters, delivered in 2018 and chartered to the Spanish Naviera Elcano. Shortly before the pandemic, Endesa made public its agreement with FLEX LNG, owner and commercial operator of this type of vessel, for the chartering of the “Flex Ranger”, a state-of-the-art vessel with a capacity of 174,000 cubic meters, the equivalent of demand a day’s worth of gas from all over Spain.
Despite their size, both are far from the world’s largest LNG carrier, the Q-Max model, from the Qatari company Qatargas and manufactured by Daewoo, Samsung and Hyundai, capable of holding 266,000 cubic meters of LNG.
What happens when it arrives?
Once the LNG reaches its destination, it goes to a regasification plant, which will return it to its gaseous state, then inject it into the gas pipelines and transport it throughout the network.
In 2020, 238 LNG tankers were unloaded in Spain, says Enagás in its report “The Spanish gas system”, in which it details that each of these plants -Barcelona, Huelva, Cartagena, Mugardos, Bilbao and Sagunto- received gas from, at less, six different countries.
By origin, the United States and Nigeria were the countries that received the highest number of shipments last year, 62 and 47 ships, respectively, followed by Russia and Qatar, with 35 and 30.
How contracts work
At the end of 2020, there were 642 vessels around the planet qualified to transport LNG, practically double the number a decade ago and 34% more than in 2016, according to Statista data.
Most of the shipping companies’ fleet is under a cargo contract – generally long-term – with charterers, which are the energy companies that will use the ship. In terms of costs, this size represents between 10 and 30% of the total in the process, say academics from the University of Antwerp, levels that in theory should fall due to the increasing preparation of the shipyards and technological advances.
However, in the report “Vision of the LNG market to 2025”, the consulting firm Deloitte underlines the weight of transport, since, in the face of a shortage of available ships, the price peaks could exceed 100,000 dollars (about 85,900 euros) at day, compared to $ 40,000-50,000 (€ 34,300-43,000) in 2013.
In the midst of the price crisis in the energy market, the strong demand for gas given the imminent arrival of winter in the northern hemisphere – where the main importing countries, the Asian powers, are located – is straining the supply of methane tankers and, therefore, the Freight costs, which in the Atlantic area for December could already be around 136,000 dollars per day (117,000 euros).
The outlook contrasts with that of mid-2020, with the coronavirus pandemic in full swing, when transport demand fell so much that high-efficiency ship freights reached $ 40,000 (34,300 euros) per day, indicates the annual report of the International Gas Union.
Future of prices
Analysts and experts in North Africa coincide in pointing out that Spain seems to have misread the current situation, marked by a firm decision by Algiers to cut diplomatic ties with Rabat, which is not the result of a tantrum or improvisation, if not a long-term thoughtful plan associated with the rebalancing of relations in this region but also in the Sahel.
A decision that will force European countries to position themselves and whose final objective is to increase the influence of Algeria – which has the geographical factor in its favor and the support of Russia – and isolate Morocco – the main ally of States. United – in the considered backyard of Europe.
“It is clear that the Algerians do not seem to want to hear about a renewal of the contract to supply Algerian gas to Spain through GME. In reality, the Spanish have been urged by the Moroccans to play the intermediary,” the Algerian newspaper assured this week “Liberté”.
In this context, the experts recall that the guarantees given by Algeria to Spain refer to “contracts already signed” and that Algiers, with a fluctuating market, probably has other ideas about future contracts.