Dozens of ships loaded with LNG have no place to unload them

Dozens of ships carrying LNG are stranded off the coast of Spain as they are unable to secure offloading sites, prompting network operators to warn that they may have to suspend loading to deal with this “exceptional situation”.

As the energy crisis has forced Europe to turn to alternative supplies, including LNG, the arrival of multiple LNG shipments has exposed Europe’s lack of “gas-to-gas” capacity, as plants that convert marine fuels once again operate Gas at its maximum capacity.

If the cargo is not cleared soon, these ships may start looking for alternative ports outside Europe to offload their cargo, according to Reuters.

There are more than 35 ships laden with LNG floating aimlessly off Spain and around the Mediterranean, with at least eight ships moored in the Gulf of Cadiz alone, Traders, analysts and sources familiar with the situation said.

An industry source said Spain is offering only six regasification sites this week. This covers less than a fifth of the number of ships queuing off its shores. The country has six stations in total.

In a statement issued late Monday titled “Emergency Operation Statement,” operator Enagas, operator of Spain’s national gas network, said it may have to refuse to offload LNG due to overcapacity at its stations. He added that the high filling levels of gas-to-gas regasification units in the country are expected to remain at least until the first week of November.

A source familiar with the situation told Reuters that there are also LNG ships docked near other European countries, which could mean dozens more are waiting.

Shipowner FLEX LNG Management CEO Oystein Kalleklev said floating LNG storage levels are at an all-time high, with just over 2.5 million tons allocated for floating storage.

The lack of regasification plants or pipelines connecting countries with these facilities to other European markets means that floating LNG cannot be used offshore. “We have seen a large number of cargoes waiting offshore in southern Spain or being traded in the Mediterranean, as well as some waiting outside the UK,” said Alex Froley, LNG analyst at intelligence firm ICIS.

The situation is exacerbated by lower industrial demand as the European economy slows and domestic consumption is lower than expected in Spain due to the unusually hot weather.

Another reason for the congestion, Froley of ICIS said, is that prices are expected to rise as winter approaches and heating demand increases, so some ships are waiting to sell their cargo at a higher price that can offset the additional shipping costs that arise from their stay at the open sea.