UK Grain LNG Signs up Qatar for Capacity

UK terminal operator Grain LNG has signed a 25-yr capacity agreement with Qatar Petroleum (QP), starting mid-2025, the two companies said late October 13.  

The agreement, for 7.2mn metric tons/year, marks the conclusion of Grain LNG’s competitive open season process that began in November 2019 – for about 8.3mn mt/yr in total, with the award expected to be made as early as March 2020 – and secures the future of Europe’s largest LNG import terminal, the UK counterparty said. A number of contracts expire in 2025, which is also the year when QP's new liquefaction capacity at its North Field is due on stream. 

QP also holds capacity in another UK terminal, South Hook in west Wales. It also last year booked capacity with Fluxys for capacity the other side of the Channel, at Belgium's Zeebrugge terminal. And in February it did the same at Montoir, on France's Atlantic coast.

Grain LNG, on the Isle of Grain in Kent, can store and deliver enough gas to meet at least a quarter of UK gas demand. 

National Grid Ventures boss Jon Butterworth said the deal was important "for UK gas security, for Grain LNG, and for the community around the Isle of Grain. LNG imports play a critical role in making sure the UK has the gas it needs, when it needs it. This agreement ensures that Grain will continue to offer the UK a flexible and reliable supply of gas to complement the growth of intermittent renewable generation."

QP CEO Saad Sherida Al-Kaabi said the agreement reaffirmed the company's "commitment to the UK gas market and that it would facilitate a greater role for LNG as a reliable and economic source of energy in the UK. He also commended NG GLNG for "a very transparent and successful open season process."

Grain LNG is the largest terminal in Europe, and it is operated by an entity that is legally separate from the British gas and power transmission systems operator, National Grid.

Three LNG terminals projects in Germany are also hoping to sign up capacity holders in the coming months, the most recent being Hanseatic Energy Hub and Uniper. But there has been a dearth of final investment decisions on the upstream side. Speaking at the Flame virtual conference October 12, chairman Jonathan Stern said he did not expect much movement for a year or two while the market digested the over supply.