Endesa will charter its second LNG carrier to guarantee the maritime transport of its LNG acquisitions after 2021

Published on Thursday, 21 March 2019

Endesa and GasLog, the international owner, operator and manager of liquefied natural gas (LNG) carriers, have signed an eight-year charter agreement for the maritime transport of the company's LNG acquisitions after May 2021, with two optional six-year extension periods. This will become Endesa's second LNG carrier, which will guarantee the transport and management of the 2 billion cubic metres per year of LNG, acquired in 2014 from US gas company Cheniere Energy, to be shipped from the Port of Corpus Christi in Texas (US). 

The LNG carrier is expected to be supplied to Endesa for the start of its commercial operations later this year, once the liquefaction plant has received the permits required to start-up its first LNG train.

The newly-built LNG carrier, the "GasLog Warsaw", with a length of 297 metres, a beam of 47 metres and a depth of 26.2 metres, will be supplied by GasLog in September 2019.

With an LNG storage capacity of 180,000 cubic metres in its four cryogenic tanks, which can be used to store gas in a liquid state at a temperature of -160ºC, "GasLog Warsaw" is similar to "Adriano Knutsen", Endesa’s first LNG carrier chartered to transport the first batches of LNG from Corpus Christi starting in July of this year.

GasLog Warsaw will sail under a Greek flag and will be built at the Samsung Heavy Industries shipyard in Korea. It will be capable of transporting LNG volumes equivalent to Spain's total daily demand, or the annual supply of 170,000 Spanish households; and it will have a maximum crew capacity of 38 people, with the actual number of seafarers expected to be below that.

The ship also features an on-board, partial re-liquefaction system that can reduce its gas consumption, allowing it to choose the type of fuel it will use, either 100% natural gas or low-sulphur Fuel-Oil, making it much more eco-friendly than most ship engines that use oil-derived fuels, greatly reducing its emissions. Likewise, the ship features on-board NOx emission reduction systems.

Until the signing of this agreement, Endesa acquired LNG for delivery directly at ports. With the new strategy, the company will manage the maritime transport of LNG by signing long-term contracts for newly-built LNG carriers, allowing it to manage gas from the source to its destination. According to José Bogas, CEO of Endesa, "this change in strategy, which involves acquiring LNG from the source and signing charter agreements to guarantee the availability of LNG carriers for maritime transport, will allow Endesa to cater to its gas supply requirements over the next 20 years with much more flexible and competitive options."

Advantages of building and owning a LNG carrier

Spanish companies need to acquire gas from other markets as it does not have its own gas fields. However, the current gas pipelines do not cater to country’s demand, which must be met with the supply of liquefied natural gas (LNG) transported on LNG carriers from producing countries.

As a result of decarbonisation trends, the demand for natural gas as a cleaner fuel for the production of electricity is expected to increase, alongside other non-emitting generation technologies, making the electricity system more robust to allow for the progressive penetration of renewables and moving towards a fully renewable and zero-emission scenario by 2050.

Endesa and the gas market

As an energy company, Endesa operates in the electricity and gas markets. Currently, Endesa is Spain's second-ranked gas supplier, commanding a share of 16.3% gas sales to customers on the deregulated market in 2018.

The total volume of gas sold by Endesa during 2018 was 103 TWh, 2% more than last year, out of which 75 TWh were sold on the retail market, 12 TWh on the wholesale market and 16 TWh were used for combined cycle electricity generation. ENDESA reached 1,604,000 customers by the end of 2018, a 3% increase over the previous year.