Interview: Marcelino Oreja, CEO of Enagás

Natural Gas Europe had the pleasure to interview Marcelino Oreja, CEO of Enagás.

With a focus on Spain, we spoke about commercial deregulation, temporary economic regime for the provision of LNG logistic services and future projects. According to Oreja, Enagás will take advantage of its expertise in tanker loading, as "in 2014 tanker loading throughout the world will increase by 210% compared to the previous year."

At the beginning of October, Spain’s upper house approved a law to reform the LNG reload business. The law will allow terminal operators to set their charges. What are the consequences of this political change? 

The Law, which is wide-reaching, includes commercial deregulation measures as well energy sector reforms. As stated in the recitals to the Law, the natural gas market is to be reformed to guarantee sustainability of and accessibility in the hydrocarbon markets. It also establishes an energy efficiency system in line with EU directives. 

Could you explain why the reform is important? 

The Law 18/2014, of 15 October, approving urgent measures for growth, competitiveness and efficiency, is important because it allows a specific and temporary economic regime for the provision of LNG logistics services. These services are delivered under long-term contracts and its main purpose is not the access to the Spanish Gas System to supply domestic demand. The Law also provides that these services, being affected by international competence, could imply that the terms of access to facilities and tolls and fees can be agreed freely between the parties, subject to the principles of objectivity and non-discrimination.

Over the last year, Spain basically doubled the amount of LNG it reloaded and exported. In just 12 months, the country is increasingly becoming a hub for international gas companies. How can local companies take advantage of this change? 

Spain is a leader in tanker loading. In 2013, 51% of the world's tanker loading took place in Spain. This is a growing market: it is estimated that in 2014 tanker loading throughout the world will increase by 210% compared to the previous year. Enagás is currently developing and promoting new LNG logistical services, such as small scaling, bunkering, transshipment and bulk breaking, while upholding environmental and logistical requirements. The tanker loading activity has enabled both Spanish and international shippers to take advantage of current conditions to sell gas in other markets and open up to new business opportunities.  

Do you expect new players to join the Spanish LNG market? Will they be Spanish? Any example?

As this activity grows moving forward we would expect new shippers to use this service. It depends largely on demand and the level of usage of regasification plants.

The Spanish government has tried several times to increase support for under-used gas-fired power plants in order to avoid closures. Was Madrid successful in this? 

It is important that the government takes steps to ensure that combined cycle plants can play a role in driving competition in Spain and to achieve an energy and economic balance over the long term. These facilities are particularly relevant as a back up for renewables as they are able to generate electricity quickly when renewables are unavailable.

Is this Spanish bet on LNG part of a wider strategy to become an international hub? Do you think that there could be positive externalities from parallel developments in the country? Could shale gas production or further investments in Underground Storage facilities support Spanish attempts to become a central player? 

Spain boasts great LNG strength with seven regasification plants and two connections with North Africa, which means it has the potential to become a bridge between Europe and the main gas producers. The regasification plants in our country can make Spain the destination for LNG from any source and for any market. In 2013, Spain received natural gas from a total of 11 different countries. That is why we must strive to unlock Spain's LNG strength via interconnections. The MidCat project, an interconnection with France via the Pyrenees, was declared a Project of Common Interest (PCI) by the European Union in 2013. It is a key supply channel for integrating the European gas market. Spain is committed to it to improve the security of supply in Europe. For exporters of shale gas, such as the United States, Spain's regasification plants can also play a pivotal role in distributing this energy source across the globe.

What is the role of Enagás in this process? Enagás is the most experienced Spanish company in the management of UGS and LNG regasification terminals. How can the firm capitalise on this positive momentum?

Enagás boasts over 40 years experience in the sector. We have vast know-how in managing complex energy systems, such as in Spain and have been developing a safe gas system in Spain since 1969. Today we have approximately 11,000 kms of pipeline, 5 regasfication plants under ownership and 3 strategic storage facilities. The company is certified as a TSO (Transmission System Operator) by the European Union and in Spain is entrusted with coordinating the operation of the system and safeguarding supply, a duty it carries out independently and transparently.

How can the firm capitalise on this positive momentum?

Enagás has played a vital role on the international stage as well, in countries such as Mexico, Peru and Chile. In Europe, we have the wherewithal to participate in integrating the gas market through alliances and by participating in key projects such as our recent acquisition of a 16% stake in the company developing the Trans Adriatic Pipeline project (TAP). We are also committed to seeking innovative customer solutions, such as our tanker loading service. 

In September, Enagás announced it successfully completed the first loading of an LNG tanker at its Barcelona regasification plant. What is the future of this new facility in Barcelona?

Having incorporated this service in our Barcelona plant, the largest in Spain, all of Enagás' plants in Spain can offer tanker loading services. Our tanker loading service, along with other new services we are working on at the Barcelona plant, leverage Spain's gas infrastructure and our ability to adapt to the changing market.

Sergio Matalucci 

Sergio Matalucci is an Associate Partner at Natural Gas Europe. Follow him on Twitter: @SergioMatalucci