Interview with H.E Ana Paula Vitorino, Minister of Sea, Republic of Portugal

Portugal has a small internal market for consuming natural gas (we consume around 4-5 billions of cubic meters per year, roughly 1% of the European Union’s yearly consumption). However, our maritime geostrategic position and port infrastructure opens amazing possibilities for the country to become a vibrant trading LNG hub and a “service station” for future LNG vessels.

We have seen demand for gas in Portugal increase steadily over the past 20 years, where do your imports come from and is further growth expected in the coming years?

On average, in the last decade, 50% of our imports come from Algeria by pipeline. The other 50% come in the form of LNG, from Nigeria, Qatar, Trinidad and Tobago, Norway, and more recently from USA. In fact, Portugal, through its main deep water port of Sines, was the first country in Europe to receive a US LNG cargo, in May 2016.

Portugal has a small internal market for consuming natural gas (we consume around 4-5 billions of cubic meters per year, roughly 1% of the European Union’s yearly consumption). However, our maritime geostrategic position and port infrastructure opens amazing possibilities for the country to become a vibrant trading LNG hub and a “service station” for future LNG vessels.

Portugal is located in the middle of the main core and non-core routes of trading in the world, making it a privileged player in the bunkering business, for both commercial trading, tourism (Cruise Ships), deep-sea and short-sea shipping, enjoying a geographical advantage to bunker the majority of the ships coming from the Suez and the Panama Canal.

Emission Control Areas (ECA) will indirectly affect the Portuguese ports. Most of the transatlantic traffic moves between ECAs, at least twice a year. These issues are important for short sea traffic partners and for the Portuguese ports.

Furthermore, the Directive of the European Parliament and of the Council on the deployment of alternative fuels infrastructure indicates that an appropriate number of refuelling points for LNG is provided at maritime ports to allow for the circulation of LNG throughout the TEN-T Core Network, according to common technical standards until 2025 for LNG.

 

Portugal has received gas supply via the Maghreb pipeline since 1997. How has the commissioning of the Sines regas terminal in 2003 facilitated growth and enabled Portugal to diversify its supply base?

 

LNG permits us more flexibility and less rigidity in our supply pool, therefore mitigating our energy security risk. Furthermore, it also provides a learning platform for understanding the dynamics of the spot market and how it can be combined with the take-or-pay contracts, thus creating the base of competencies for an integrated LNG hub activity.

Portugal receives LNG cargoes from diverse suppliers around the globe. What is your view on the current supply-demand outlook in the world and what opportunities do you see for LNG buyers at present?

All the forecasts from various organisations like the International Energy Agency, the Energy Information Administration and OPEC indicate that the oil price will remain around $40 to $50 a barrel, at least until the end of the present decade. Taking into account that the natural gas price is pegged to the crude price, we can conclude that abundant and cheap LNG will be available in the market for quite some time.

This trend is reinforced also by the fact that natural gas unconventional producers (like the shale gas industry in the US) not only are able to react immediately to price signals (increasing production when prices rise which results in a moderate increase of the commodity value, depressing the price), but also are very effective in deploying innovations that increase the efficiency of the production.
This factor, combined with the growing efficiency of the LNG industry technologies, low sea transport tariffs and the need for LNG companies to diversify their revenue streams for paying up their investments in the short run, makes LNG a buyer-driven market.

In that sense, for buyers, LNG is a great option for assuring a low-carbon energy security at the most efficient market cost.

LNG as a fuel is a growing sector. Does Portugal have any plans to develop bunkering activities out of your terminal?

Yes, we have that strategic intention. The Ministry of the Sea is starting to deploy a plan for increasing the Portuguese port’s competitiveness and LNG is considered a strategic vector. We are going to announce during 2017 the Strategic Plan for LNG Maritime Infrastructures.

A main focus is to develop our offshore bunkering capabilities, in small-scale, due to the higher flexibility of this system for vessel refuelling activities, in the ship-to-ship mode. This is a solution that can be deployed, perhaps combined with an onshore small-scale bunkering facility, for fuelling LNG cruise vessels in a port of mainland Portugal, in a port of Madeira archipelago and in a port of Azores.

Secondly, we want to use LNG to decarbonize the maritime connections between mainland Portugal and our archipelagos of Azores and Madeira. In principle, this will help to create a sustained internal market, with the additional economic rationale for creating a LNG Atlantic service station based in the Azores archipelago.

Thirdly, we want to explore the opportunities of increasing the importance of Portugal and Sines as a LNG hub not only for global trade, but especially as an alternative for regional trade in Europe. Recent developments in offshore bunkering technology will potentially open in the future the possibility of creating “virtual maritime LNG pipelines” between Portugal and, for example, the North of Europe.

The Portuguese government and I, Minister of the Sea, are determined to position our country as a leader in this innovative market.

This year, the 18th CWC World LNG Summit is coming to Lisbon on 28 November to 1 December and the Ministry of Sea has endorsed the event. What are your expectations for this important meeting in its new location of Lisbon?

The Portuguese government and I, Minister of Sea, wilfully supports the 18th CWC World LNG Summit & Awards Evening taking place in Lisbon on 28th November to 1st December 2017. This initiative is an excellent opportunity to promote Portugal’s advantages for the development of the LNG market, as well as building, developing and continuing business partnerships with players from across the entire global value chain. Given the importance of LNG within the context of the global economy and world trade, we will be honoured to welcome to you Portugal to further discuss the growth opportunities that the LNG industry is creating.

© The CWC Group 2017