The Dragon LNG terminal, located in southwest Wales, has announced the launch of a binding auction for the allocation of liquefied natural gas (LNG) regasification capacity starting in August 2029. The call for bids covers approximately 9.3 billion cubic meters per year, positioning itself as a significant opportunity within the UK energy market.
A strategic opportunity in the gas market
In a context of growing demand for flexibility in energy supply, this auction stands out as one of the few options available to secure long-term primary regasification capacity in Northwest Europe. The British market, characterized by its liquidity, reinforces the attractiveness of this initiative for gas traders and large consumers.
Likewise, Dragon LNG’s infrastructure has been a fundamental component of the country’s energy system since it began operations in 2009. Currently, the terminal can cover around 10% of the national demand for natural gas, which underscores its importance within the energy grid.
Flexible structure and competitive access
The company, jointly owned by Shell and VTTI, has designed a bidding model based on capacity packages. These allow interested parties to access volumes starting at approximately 1.2 billion cubic meters per year, with contract options ranging from 50% to 100% of the total available capacity.
Furthermore, participants will be able to configure their proposals by combining different tranches and terms, with minimum contracts of 10 years starting from August 26, 2029. This flexibility seeks to adapt to the different commercial strategies and portfolio needs of the sector’s players.
Regulatory framework and transparency
The process has been developed in line with Ofgem’s guidelines on regulated third-party access to LNG facilities. This ensures a transparent and non-discriminatory environment, facilitating the re-marketing of available capacity on equitable terms.
In addition, the company has conducted prior consultations with market participants to adjust both the product design and the auction mechanism.
Next steps in the process
The data room is scheduled to open in April 2026, allowing interested parties access to the necessary contractual and technical documentation. Bids must then be submitted before July of the same year.
According to Simon Ames, CEO of Dragon LNG, the initiative seeks to offer a solid solution for those who need to secure a long-term LNG supply, backed by the terminal’s operational track record.
Source and photo: Dragonlng