Spain modifies natural gas laws to encourage LNG bunkering

Spain modified three of its natural gas laws over the weekend, publishing a new Royal Decree with the aim of improving the third party use of infrastructure as well as providing a regulatory structure for new services such as LNG bunkering, and for the procedure for closing gas infrastructure assets, among other modifications.

The Royal Decree (335/2018), which came into force on Sunday, includes the calculations for a new set of fees that will be applied for LNG bunkering at Spanish ports as well as new fees for injections, withdrawals and storage of gas at the national virtual balancing point.

The new fees will not be applied until the periodic updates are applied while operators will have three months to convert existing contracts related to the Virtual Balancing Point (PVB), according to the Boletin Oficial del Estado (BOE).

The three previous decrees that have been modified are 949/2001 governing access and financial details of the gas system, 1434/2002 governing gas sector activities and 984/2015 governing the organized gas market.

In terms of LNG bunkering, the decree highlights the need to increase the usage of the country’s LNG infrastructure, by making capacity contracting more flexible while also maximizing income for the system.

At the same time, the move is designed to comply with EU directive 2014/94/UE regarding alternatives to petroleum-based fuels, the document said.

The growing market for LNG bunkering has led to a need for Spain to clarify its existing tariff structure to apply it to the new service and also set out a framework for the new services which have no tariff structure already defined.

Regasification fees will be determined on a monthly basis, with a fixed rate and variable rate determined by the quantity regasified during the period, according to the BOE.

The fee for unloading LNG is on a per ship basis, again with a fixed rate and variable rate, depending on the volume concerned, while the legislation makes allowance for incremental capacities at more than one installation and for more than one service.

The new fee for LNG bunkering also has a fixed and variable rate, which can vary from port to port, but there is a breakdown for volume into four groups: equal to or less than 5,000 cu m; between 5,000 cu m and 15,000 cu m; more than 15,000 cu m; and cooling down services.

There is also a breakdown into four service types depending on the number of operations carried out: short-term, for a one-off loading; 30 days — with at least three loadings in the period; 90 days with at least five loadings in the period and a full year with at least 12 loadings in the period.

Unused services will still incur the fixed fee and possibly, a penalty, the document said.

Ship to ship transfers of fuel carried out at the terminal, which make no use of the storage facilities will warrant a discount, the document said.

Truck loading will incur a similar fee structure to ship loading ie a fixed and variable rate depending on volume, charged monthly.

The new decree also sets out a new fee structure for entry and exit from the virtual balancing point (PVB) as well as storage at the PVB, which previously had no fee structure assigned. These new fees could become particularly relevant for the biogas and biomethane businesses within the country. These are generally a straightforward calculation of the fixed tariff multiplied by the contracted capacity.

Underground storage sites have a more complex calculation, which includes payments for injection, withdrawal and storage.

Among other measures, the decree also details regulation to cover the dismantling of gas infrastructures and an effort to stamp out fraudulent activity in the retail sale of natural gas.

While the decree does not mention the “mothballing” of power plants, a law gas groups have been lobbying for over several years, it does set up a regulatory framework for “temporary and definitive closures” of “transport, regasification, storage and distribution of gas” which did not previously exist.

The new decree also gives the Ministry the right to exempt certain operators from retail operations and transfer their customers to the last resort suppliers in case of insolvency or malpractice among other reasons.
Source: hellenicshippingnews