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National Grid scales back the amount of LNG it is accepting into Milford Haven over storage fears

16 May 2022 3 minutes Read
Jetties at the South Hook LNG terminal. Picture by Mat Fascione (CC BY-SA 2.0).

The National Grid has scaled back on the amount of Liquid Natural Gas it is accepting into Milford Haven in Pembrokeshire over fears that it could run out of storage.

The Welsh port has become a key destination of LNG, not just for the UK nations but for the rest of Europe since Russia invaded Ukraine in February.

LNG shipments to the EU often flow through Milford Haven because ports in the UK nations have a greater capacity to dock tankers and turn the liquefied fuel back into gas. Some countries such as Germany do not have the ability to process LNG.

But such large amounts of LNG have arrived from the US, Qatar and Algeria, that there are concerns that the UK pipeline system cannot move it all to mainland Europe fast enough.

As a result the National Grid has reduced the amount of capacity offered at the port, raising the prospect of lower fuel prices for the winter ahead.

The energy regulator Ofgem which approved the plans said: “The issues we are dealing with are urgent and need action now to protect the interests of consumers in the event that sustained higher levels of LNG delivery over a prolonged period are experienced over the summer.

“We believe that approving the temporary changes… will ultimately protect consumers from the avoidable costs that they could otherwise face as a result of the increased likelihood of constraints.”

‘Conservative’

However, LNG suppliers have criticised the plans, saying that they make little sense at a time of higher energy costs.

ExxonMobil policy adviser Chris Wright said: “There is a risk that the reduction in supply to the market could result in upward pressure on [British] wholesale prices which could ultimately feed through to end consumers.

“The very fact that this change proposal has been raised risks significantly undermining efforts to deliver LNG to the UK market, and for onward transmission to wider European markets, at this time when LNG has never been in greater demand.”

Lauren Jauss, of German gas company RWE, said: “We believe that these arrangements are unnecessarily conservative, will deter LNG imports and hence increase wholesale prices and may present an increased risk to security of supply.

“We are surprised that the geopolitical situation in Europe is cited as a reason to reduce baseline capacity. In our view, it is a reason to find ways to maximise possible throughput and attract LNG, not to propose arrangements that achieve the opposite.”


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