The offshore natural gas industry is typically dynamic, but the sector experienced drastic changes coming into 2009 that stretched it to the limit. Like the telecoms industry going into the new millennium, demand for LNG reached its peak in 2008 and is now receding from the supply rush.

A recent positive development, however, is the construction of the Gate Terminal in Rotterdam. Set to transform the country’s status on the offshore shipping map, this is one of the few projects still being carried forward in the LNG shipping space.

The Gate Terminal will be the first LNG import terminal in the Netherlands, enhancing Rotterdam’s position as the third-largest port in the world. It will service the offshore shipping industry with an initial throughput capacity of 12 billion cubic metres per annum, with three storage tanks and two jetties.

Port of Rotterdam Authority director of industry and bulk cargo Bas Hennissen says that with the new construction, which is due to be ready by 2011, Rotterdam hopes to become the largest energy port in north-west Europe.

"We can offer the industry unrestricted access around the clock with no locks," said Hennissen at the ViB Global LNG and LPG Logistics Conference in Rotterdam. "We have a quick approach and leaving pattern to and from the North Sea and our jetties will be designed so that we can accommodate supertankers. We will also have gas pipeline connections into the major European markets."

Starting from scratch

Gate Terminal commercial manager Stefaan Adriaens says that despite the credit crunch, demand for LNG is still on the rise with the number of projects underway testament to the demand. "What we see is demand in the core LNG markets. In the Netherlands there are still four projects, with another seven or eight in the UK."

For Adriaens, however, the appeal of the Gate Terminal is clear and he is surprised the location was not chosen as a suitable site earlier.

The Netherlands has long been an import/export hub but it was not until 2005 that Gasunie and Vopak partnered to develop the Gate Terminal. Since then long-term off-take contracts have been signed with four major European energy suppliers – Dong Energy, EconGas OMV, Essent Trading and E.ON – that in total represent the terminal’s initial capacity.

“The Gate Terminal will be the first LNG import terminal in the Netherlands, enhancing Rotterdam’s position as the third-largest port in the world.”

The remarkable nature of the port terminal is further enhanced by the land reclamation and deepwater dredging that is being carried out and the proximity of the port to local towns and cities. The latter fact, says Hennissen, made the port authority produce very stringent LNG-focused regulation. "A lot of the work on our side has gone into developing emissions policies for LNG tankers. We are close to the sea but also close to agglomeration. We are now ready to receive those tankers and deal with them in a safe way," he says.

"Most of the work was done from scratch, helped by policies written in other parts of the world. It was all new for the environmental authorities as well so we were in it together and that’s how we worked it out." In addition to being particularly sensitive to the conditions the location of the terminal placed on the project many players are also working together to ensure that emissions are fed back in to ensure that it operates as a carbon neutral installation.

Recognising the potential

Despite a strong focus on legislation and protecting the environment, one of the main challenges was to overcome the negative perception of what the constant stream of oil and gas tankers would mean for the local population. Haunted by images of past oil spills and constant emissions, Hennissen says that educating people about the industry’s safety record has been a major undertaking.

"When people see an LNG tanker they think it is very dangerous … but if you look at the safety record that is not the case. We have worked hard on the public opinion but people are not convinced as they are not used to it," Hennissen says. He adds that most local people recognise that this is a unique opportunity on a grand scale and they are approaching developments with a mixture of excitement and caution.

The investment boom in LNG shipping since 2004 means there will now be "plentiful" shipping capacity for the next two years, according to a Banc of America Securities-Merrill Lynch report. Indeed, the number of LNG tankers increased from about 150 at the end of 2003 to more than 300 today. And although there have been cuts in consumption around the world in past months, natural gas demand in Asia and Europe accelerated by 7.1 million tonnes in the first half of 2008, a trend that is set to continue in the long run.

Adriaens describes this situation as one of "flexible" markets and sees it as a positive situation for LNG shipping overall and the Gate Terminal. The Gate promises to increase security of supply to Europe and allow new players to enter the market. The number of long-term contracts signed gives the port a chance to prove the ship management policies being put in place and the safe storage and regasification that can occur on the Netherlands’ shores.