EFQM Good Practice Competition 2014

Transcription

1 EFQM Good Practice Competition 2014 Creative Customer Solutions Registration form Contact person Fernando Impuesto Nogueras Job Title Commercial & Logistics Director Organisation ENAGAS S.A. Street Paseo de los Olmos 19 Zip and city Madrid Country Spain Phone Activity sector Energy / Utilities (Gas Distribution) The registration form and submission report have to be returned together with the video to Vinciane Beauduin at EFQM (Vinciane.beauduin@efqm.org) by 16 May 2014 at the latest. Should you have any queries, feel free to contact Vinciane Beauduin via at Vinciane.beauduin@efqm.org, or by phone on Good Practice - Submission Report Good Practice Title Reloading Operations and New Services at Enagas LNG Terminals Organization overview Enagas is Spain s leading natural gas transmission, regasification and storage company and the technical manager of the gas system. It is also present in Mexico, Chile and Peru. The company is also registered as a Transmission System Operator (TSO) by the European Union, making it equivalent to other European natural gas transmission network operators. With more than 40 years of experience, Enagas owns and operates over 11,000 kilometres of highpressure gas pipelines, three strategic underground storage facilities and seven regasification plants. The Sustainable Management Model and CSR Strategy are key elements in the development and deployment of Enagas business, both the regulated facilities management in Spain and the international expansion. Enagas is a global leader in the Liquefied Natural Gas or LNG field. The company is constantly upgrading its facilities with the latest technology and offering cutting edge logistics and operating solutions to its customers and partners. 1

2 Desired Results Summarise the key objective(s) of the approach you have adopted Developing infrastructures to offer new services to current and potential customers, to increase their use and future incomes by new final and transit demand, through the analysis, evaluation and proposal of enhanced procedures and technical implementations. Improvement of technical ratios related to this new kind of services to increase the efficiency of the operations: reloading rate, boil off gas (BOG) losses rate, logistic efficiency. What has been improved in detail? Enagas benefits: Improvement of technical ratios : o Reloading rate: From 633 m 3 /h to 3,690 m 3 /h in Huelva and from 829 m 3 /h to 2,400 m 3 /h in Cartagena. o Boil off gas losses: From 2.5% to 0%. o Slot flexibility: The flexibility of slots has allowed Enagas to be both a pioneer and the ultimate leader in vessel reloading worldwide. According to the International Group of LNG Importers (GIIGNL), 51% of the world's reloading operations were carried out in Spain in o Diversification of tariffs by products: Cool Down and gassing up tariff. Spanish Gas System benefits: Direct incomes from reloading activities (indirect incomes from unloading, storage and unbalances associated to LNG reloaded, are not included): o 2011: M. o 2012: M. o 2013: M. o Overall: M. Customer benefits: o Our customers increased their profits thanks to the operations carried out at Enagas infrastructures. o Due to the improvement of technical ratios on the side of Enagas, customers have reduced their costs too. A reduction of 2.5% boil off gas losses represents savings of about M on a single vessel. Environmental benefits: The improvement of the boil off gas losses slashed CO 2 emissions by 4,080 tonnes during a vessel reloading. Approach Describe the current approach within your organization Regasification plants have been key infrastructures at Spanish gas system since These plants allow vessels to unload LNG from any country in the world and satisfy demand in a flexible manner. Once unloaded and stored in tanks, the LNG is turned into its gaseous state before being injected into pipelines. Enagas' traditional business was based on these services. In 2008, Enagas foresaw a decline in natural gas demand due to changing market conditions. The booked regasification capacity at Enagas LNG Terminals began to decrease due to an increase in pipeline supply because Natural Gas (NG) was cheaper than LNG. Faced with this situation, commercial, technical and logistical studies were carried out to identify the new needs of our customers. Customers, regulators, shippers, investors and employees were all 2

3 involved in the process of analysing, implementing and evaluating new service practices. Particularly, Enagas did a technical and logistic analysis and a market research to attract new international customers to our infrastructures apart from providing better service to already established customers. This analysis was carried out following main Enagas stakeholder s interests, including them on the analysis, implementation and evaluation processes: shippers, Spanish regulators and employees. We discovered that we had to transform the traditional business model at our facilities, offering new logistic services, mainly vessels loading services for the international market. This new practice enables us to use our regasification plants to reload LNG onto vessels opposite of what these plants were originally intended for. Enagas developed a strategy to analyse market perspectives and Liquefied Natural Gas (LNG) terminals in order to refurbish its terminals from the traditional LNG terminal model, meaning unloading of LNG, storage and regasification of NG, to the LNG terminal for transhipments model, meaning unloading of LNG, storage and reloading of LNG to export. Therefore Enagas switched its business model strategy at LNG Terminals, specifically binding it to reloading operations. This paradigm shift implied the whole Enagas structure to switch its mind from the 1969 standardised LNG model to a new LNG model. Those changes were managed not only at technical level, but all staff structure was meant to be adapted to the new business strategy. To support the new activity, a Commercial, Logistic and Technical plan was initially designed in 2008 on the forecast of future new LNG demand. The plan had to be modified several times between 2008 and 2012 as new technical solutions and issues arose during the effective execution of the reloading operations. Describe which elements have been implemented Based on the results of the analysis performed, some key modifications were selected and improved in our terminals: Adapting LNG terminal scheme to allow the terminal to reload LNG from the tank to the vessel, being the opposite it was designed for. After the technical adaptation of the terminal, Enagas realised that Boil Off Gas System at the terminal was not able to send out that NG to the grid, and hence it was necessary to vent it to the atmosphere. This issue is very important both for the shippers, as an economic loss, and for the environment, as it results in CO 2 emissions. Hence, Enagas designed a BOG reduction plan, implemented from 2008 to 2013, managing to reduce the BOG losses from 2.5% to 0% in that period. Enagas has a zero BOG losses policy. Improving the reloading rate of the LNG arms. Once the terminal of LNG was ready to reload, we realised that initial reloading rate was not fast enough to provide a good service to our clients. The reloading rate has improved from 633 m 3 /h to 3,690 m 3 /h in Huelva since 2008 and from 829 m 3 /h to 1,800 m 3 /h in Cartagena. Slots programme: the flexibility at the terminals is a key issue for the shippers. Enagas has developed a more efficient slot allocation programme to strengthen our service to our client. Regulatory development: LNG is a regulated business in Spain including a whole portfolio of technical and economic regulation to be approved by Authorities. The development of a new service required an evolution of these regulations which were discussed with the Administration taking into account technical issues & tariffs. Development of a legal framework on reloading and new contracts following the existing regulation. 3

4 Describe how this approach is linked to your overall strategy From the early beginning of this new LNG service development project, we aligned it with Enagas main corporate drivers which became the key drivers for the project. Specifically, Enagas strategy was: Regulated businesses: European Union gas regulation allows Transport System Operator (TSOs) to own and operate LNG terminals under national regulation or under an exemption approved rule. Even if in other European countries there are exempted LNG Terminals, all infrastructures at the Spanish Gas System remain under national regulation. Specifically, Enagas corporate strategy is to keep under regulation. Hence, all this service development should and has been carried out strictly following current Spanish regulation and keeping all LNG terminals as regulated. Enagas has strengthened its core regulated business, taking advantage of the excess capacity at its terminals. Shareholders pay out: The business orientation of the project has been always considered as a key issue of the project. Reloading operations are very profitable, and have guaranteed Enagas incomes and increased shareholders pay out. Sustainability: This driver is part of the core business of Enagas, both as Economic Sustainability, supported by the new incomes achieved by reloading operations, and as Environmental Sustainability, as the Boil Off Gas losses have been reduced from 2.5% to 0%. This reduction following Enagas policy of zero emissions. Even if some improvements still need to be done, the results achieved prove the effectiveness of Enagas strategy. This kind of initiatives allow us to maintain the Enagas positioning on international CSR Indexes: International expansion: Enagas core business area is Spain; however since 2011 the international expansion of our businesses has turned into a new policy in order to guarantee future incomes. International expansion is a complex process, in which corporate reputation is always a valuable asset for the allocation of international tenders. The reloading business has attracted new international customers interested in vessels reloading which were not present at the Spanish System in The number of customers in Spain has risen from 37 to 71 in 4 years. Being the leader at the LNG reloading businesses has been very significant for the acquisition of stocks at the Altamira Mexico LNG terminal and the Quintero Chile LNG terminal. The way all this initiative has been designed, implemented and managed, proves Enagas commitment with two Fundamental Concepts of Excellence of EFQM Model: o Sustaining Outstanding Results and o Creating a Sustainable Future. Deployment Describe how this approach was implemented within your organization LNG businesses have switched from long term contract to short term contracts. The difference of prices between Europe, Asia and America forced Global shippers to adjust their market approach. Due to those changes, the LNG terminals in Europe reduced their booked capacity and increased their pipeline supply. Additionally, the LNG supply/ng supply balance was 4

5 expected to change. Due to this new situation, Enagas had to switch its business model. Two services were designed, both the reloading service and the storage needed to perform the reloading operation. New business opportunities market analysis. Discussion with suppliers, stakeholders and business developers to find out which businesses should be carried out in the middle and long term. Logistics: new logistics, improvement of technical capacities, optimisation of vessel programming. International promotion of the new services and of Enagas as the leader provider. What were the major challenges you had to overcome? Internal structure and processes: Gas sector has always been a very conservative and domestic business. Accordingly, human resources, structure and processes, were not ready for dealing with international customers and promoting the international expansion of businesses abroad and competition. Mental shift on all employees and processes redesign were necessary as a first step towards the evolution of the company. Technical challenges, reducing BOG losses and increasing reloading rate are systematic processes that had to be developed by experienced teams during a long period of time. Regulatory evolution: Spanish gas sector was conceived only for regasification activities. The development of new LNG services involved legal authorization of these activities and also the retribution of those activities (incomes for Enagas). Hence, discussions with the regulatory authorities were undertaken. Assessment Please describe what benefits have been achieved As mentioned at the Desired Results section, economic incomes and technical improvements have been steadily achieved during the past 4 years. Particularly, the Spanish Gas System, technically managed by Enagas, has registered an increase of the number and volume of LNG reloaded as is shown by the following figures: a) Number of reloading operations at the Spanish Gas System. b) LNG reloaded on the vessels measured on energy terms (GWh) has increased x2.7 between 2011 and 2012 and x1.4 between 2012 and Reloadings in Spain: GWh and nº LNG vessels x1, x2, x1, GWh Nº LNG vessels (includes cooling down) (Est.) Enagas is not only a pioneer in vessel reloading in Europe but an industry leader. According to the 5

6 International Group of LNG Importers, 51% of the world's reloading operations are carried out in Spain. Those operations are additional to national demand; hence they resulted in new customers and new incomes of M between to thee Spanish Gas System. At the beginning, the evolution of number of operations and energy reloadedd were analyzed to review the impact of the global strategy designedd to increasee the use and incomes of Enagas infrastructures. Incomess were aligned with the increase of the operations, and thee technical roadmap wass modified to improve results in all areas. Direct income related to reloading activities x1,,4 x2,8 M Refinement What are the lessons learned? Enagas approach for the development off the new LNG servicee has proved its effectiveness, increasing incomes for the company to offset losses due to a fall of traditional demand. Main key findings that should be consideredd for future business development are: Foresee market evolution and take decisions before our international competitors. Organisationn flexibility to t enable thee change internally and focus f on our clients. Coordinationn with otherr stakeholders (Regulatory bodies, shippers, etc.) ) Furthermore, Enagas has included the reduction of Boil Off gas losses in reloading vessels as a company target included in variable remuneration scheme. The achievement off this target impacts in the variable remuneration of all employees, including Chairman and CEO. Several European terminals have emulated our initiative, modifying their facilities and offering vessels reloading services. However, during this process we have learnt other lessons fromm issues wee didn t consider in advance, such as: some technicalities that arose during the implementation phase, and the continuous study of other competitors applying the same reloading procedures as Enagas (Gate, Montoir, etc) that could have addressed other issues not considered by us (benchmarking): for instance, the use of a special BOG compressor to increase the liquefier capabilities was not in our 6

7 first designs and now it has been defined as good practice for future LNG terminal refurbishments. These benchmarking practices with other operators have been included on the Commercial & Logistics development plan of the company for the coming years. Summarize the planned next steps if applicable First, we have still to standardize the model at the Barcelona LNG terminal, the single Enagas terminal not ready to offer reloading services yet. At this moment Enagas is adapting the terminal according to our past experience and making use of the first in class technology. This next step is on the standardization phase, once the business model has proven to be efficient and profitable. Second, and according to the model created to develop the reloading service from 2008 to 2013, Enagas has started the development of new services due to environmental (EICA zones) and logistic (arctic vessels vs. conventional vessels) reasons. We are developing a technical, logistic, regulatory and market analysis to develop new services at our LNG terminals on the basis of the commercial and technical view we have developed in 2008 and using the lessons learned during the period adapted to the new scenario of the LNG business. Some of these services are: Bulk breaking and Small Scaling: Currently, the reloading service is focused on large vessels. However, due to economic reasons, it is necessary to provide LNG on small scale basis. The regulatory development and the adaptation of berths to that kind of vessels is needed to supply a need that will ramp up in the coming years. Bunkering: Similarly, the conversion of ships from Maritime Fuel to LNG due to environmental reasons will lead to the development of LNG bunkering station along the coast. That bunkering stations have to be supplied on Small Scale cargoes to be fulfilled on LNG terminals, hence adapting regulation to that service. Parking gas: Other new services such as storage for a long period are not consider on the regulation. Regulatory framework and technical analysis to consider the ageing of the LNG on the tank are necessary to develop this service. Transshipment: Due to logistic reasons (arctic vessels vs. conventional vessels) other kind of transfer of LNG between vessels should be carried out, implying a long term regulatory structure to guarantee that the flux of LNG is continue and business models supported on this transshipment could be carried out. All these services are part of the Commercial & Logistics Plan of Enagas. In order to make all employees adhere with this key strategy for Enagas Sustainability, the Commercial and Logistics Plan targets achievement has become a corporate target, impacting on the variable remuneration of all employees, including Chairman and CEO. 7