Europe’s Top LNG Plant Operator Wants to Move Into Ammonia, CO2

(Bloomberg) -- Enagas SA, Europe’s largest LNG terminals operator, is planning to enter the business of processing ammonia and CO2, as it seeks to gradually diversify away from natural gas distribution and into markets that will gain importance with the energy transition. 

“We intend to include in our strategic update, which will be presented within this year, our participation in the CO2 and ammonia businesses from the infrastructure point of view,” Chief Executive Officer Arturo Gonzalo said in an interview in Madrid. 

The move is part of the Spanish company’s effort to capitalize on its large gas infrastructure to create new sources of income linked to clean energy and carbon-emissions reduction, as profits from its regulated assets ebb. The race to slow down climate change will increase the need to transport CO2 for permanent sequestration in geological formations, while ammonia is used to transport hydrogen. 

“We think there’s going to be an infrastructure side to these businesses. You’re going to need hardware, loading facilities, tanks,” said Gonzalo. “All of that can be provided by Enagas in the most competitive way.”

Shifting from gas to ammonia is already an option included in the long-term offtake agreement for Germany’s first land-based, liquefied natural gas import terminal, which Enagas is going to operate. 

Liquid ammonia is denser than LNG, so readapting gas tanks would reduce their capacity to about 70%, but an LNG gas plants is still the “best place” to liquefy it, as well as to liquefy C02, he said. “We have a very strong incumbent position also for these new molecules, so what we are working on is how to make our LNG plants evolve into multi-molecule facilities,” he said.

Enagas may also use smaller-volume vessels for the new operations, in the range of 10,000 to 20,000 cubic meters, comparable to the 12,000-cubic-meter LNG bunkering vessel it operates in the southern Spanish port of Algeciras, according to Gonzalo. 

New Capacity

The natural gas business is still the company’s priority, but as long as it has spare capacity or is able to build new capacity in its existing plants, Enagas is going to be in a position to enter these new businesses, said Gonzalo, adding that the gas facilities will gradually need less capacity. “If there’s an attractive return in CO2 and ammonia that requires new capacity being built, then of course that we’ll consider that.”

Enagas’s stake in Tallgrass Energy Partners LP is helping the Madrid-based firm build expertise in the CO2 business, as the US gas transportation company’s Trailblazer unit overhauls its pipeline system to transport C02 for permanent sequestration, said Gonzalo.

The company has also slashed its annual dividend by 43% to €1 ($1.06) per share in order to fund its investment plan for hydrogen assets of about €3.2 billion, so “it’s not in a hurry” to sell its stake of about 30% in Tallgrass, he said, adding that Enagas expects its regulated asset base, or RAB, to grow by about 10% annually through 2030. 

Hydrogen assets are set to reach €3 billion in 2030, when they’ll outweigh gas ones, expected to decrease to €2 billion.

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