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Hardships and Disputes In The Terminalling Services - Fee Capturing Tool

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Victor Tenev's picture
LNG Business analyst ROITI limited

Being a petroleum economist and a former chief accountant, I am fully determined to set and follow the highest standards along with the in-depth knowledge of finance and the solid academic...

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A substantial share of information about the European regasification capacity remains a grey area. 
In the proposed digital framework users would have the right tool designed to facilitate the entire process of acquiring information in a more versatile way in terms of having a good grasp on the tariff tables and fees for more than one Terminal.

Amid the prolific and expanding LNG industry worldwide, the massive influx of Liquefied Natural gas in the Old Continent makes Europe the third largest region for LNG import, reaching almost 80mtpa out of 356mtpa LNG global trade volume.(preceded by Asia-Pacific and Asia regions respectively).

Although not to be compared with Asia-Pacific region, the overall regasification capacity in Europe amounts 179mtpa with currently 37 operating terminals, and a good deal of more to be built this year(EPC)or in the planning stage(FEED, FID). By giving consideration to Europe’s largest LNG receipts from Spain (45 MTPA) and UK (38MTPA) in addition to the ongoing construction of new import facilities, we may be of opinion that stringent transparency requirements need to be introduced before the Terminals Operators in the interest of more competitive, accessible and fair market environment, if not, then roughly 37% of total EU send-out capacity will continue to be beyond the reach information-wise.

Not much has been done recently to tackle the information opacity and complexity, which according to the Council of European Energy Regulatorsare evident to be a potential barrier against new LNG Imports’. CEER/GIE is the main driver behind bringing this up before the National Regulatory Agencies (NRAs) and LNG System Operators (LSOs), represented by the GLE. Therefore, there is an existing GLE Transparency template (GIE/GLE), implemented on a voluntary basis by the LNG system operators, which in a way deem to be a temporary remedy of questionable benefit for the current situation. Furthermore, CEER also expressed its opinion on broadening the catalogue of the Terminal services, which is to say more non-bundled services to be offered in order to increase flexibility.

However, this concerns more the generic Terminal characteristics rather than the commercial information, which is more vital for taking the informed decisions (i.e., ‘regasification costs’ etc.)That being said, a substantial piece of the European regasification capacity remains to be a gray area. (e.g., UK receiving terminals)

In a nutshell, there seem to be three peculiarities, which may raise caveats to the European LNG trade:

  1. Lack of genuine level-playing field - A handful of Import Terminals (6 LNG Terminals)are under an exemption regime, which in the matter of data accessibility would mean that all the commercial information regarding Tariff and Fee structure is not disclosed, but strictly confidential.(e.g., Basic services such as Unloading, Storage, Regasification).
  2. Lack of service standardization – Presently, there is a substantial tariff variation between regulated terminals. (For some terminals gas-in-kind will be due approx. 1.6% of the volume of LNG to cover consumption and losses of the regasification chain.) There is only one type of bundled service offered by all EU import terminals (regulated and exempted), which constitutes a terminal’s three essential activities: ‘ship unloading + LNG storage + regasification (send out)’. By convention, LNG Tariffs are applied to 3 concepts : • Unloading LNG (fix & variable terms) • LNG storage (only variable term). Penalties for having “too much” LNG stored (overrun). • Send out /regasification capacity (capacity & commodity charges)
  3. Poor-quality information – all in all, the information published is not illuminating, on the contrary, it is rather incomplete with questionable value as concerns the usage of the LNG receiving Terminals. In addition, there is a limited understandability if we consider the absence of a word-for-word translation for some of the European LNG Terminals(not easily accessible, understandable, and/or only available in the national language.). In the end, all this will open the door for more inefficiency, confusion, prolonged time for information gathering, leading inevitably to a market distortion.

The Concept is aimed towards bringing answers for major questions in the energy sector, spares no efforts in going after ‘the sweet spot’ in the synergistic relationship between Energy and Software. By solidifying the Role of the software in the energy, through adopting Digital solutions the LNG shipping companies are most likely to benefit from these smart solutions.

Proposed LNG-T collection Tool

LNG Terminals Platform concept is with a scope in the LNG Import Terminal Services, particularly all the expenses incurred between the Berthing/Mooring process ending with the Injection process into the National grid system. (e.g., Tariff tables, Fees, all fines, and penalty charges etc.) Thus, that is to empower the users to unify their management and have a good grasp of the full spectrum of LNG Import locations by giving them control over the Tariff structure and the ability to optimize for the benefit of their organization.

In this digital framework, the users will have the right tool designed to facilitate the entire process of acquiring information in a more versatile way in terms of having a good grasp on the Tariff tables and fees for more than one Terminals and thus – helping out the LNG Shipper by obtaining the necessary information at the right time with minimum effort along with more in-depth information in regards to other extrinsic value factors of holding the LNG at the Terminal – that is to say, boil-off gas rate and maximum duration of LNG storage, type of storage facilities, injection/withdrawal rate, types of capacity usage, market conditions and the capability of that LNG to reach a specific market with relatively beneficial pricing behaviour.

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