LNG Slot Price In Europe Drops On The Back Of Increasing Inventories
- 28-Jun-2022 6:54 PM
- Journalist: Patrick Knight
The slot auction price of Liquified Natural Gas (LNG) in Europe is witnessing a fall after a high price run for three months. Several factors are driving the drop in the European market, especially Belgium, Spain, and Italy.
Slot auctions are conducted by countries that offer companies to auction unloading and gasification facilities. An LNG terminal in Zeebrugge, the only regasification facility in Belgium, offered the July 6th slot cheaper than in May and April. The low number of slots available for June, which has historically been used for maintenance work at regasification facilities, may have contributed to the high slot prices heard in May and April. Rising inventories of LNG in Europe are also a significant reason behind the reduced slot prices. According to Gas Infrastructure Europe (GIE), the inventory levels have been risen above 55% in June, while it has below 34% during March 2022.
The inventories were filled quickly by various countries in Europe as they have taken it as their priority to tackle the energy crisis they have been going through. Improved supply rates from the US and Qatar assisted in increasing the inventory levels. Italy even broke a signed contract of LNG supply to Pakistan to ensure to fill their inventories first.
All four major French terminals have reduced their import levels as they plan to conduct maintenance activities during the last week of June 2022, so the slot price in France has not been reduced like in Belgium and Italy.
According to ChemAnalyst, the lower slot price reduces the storage and processing cost for the industry. It will reflect in LNG prices in the domestic market in countries that provide discounted slot prices.