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Germany ramps up capacity for LNG imports to replace Russian gas

Commodities May 05, 2022 10:03AM ET
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6/6 © Reuters. FILE PHOTO: Uniper logo is seen in this illustration taken, May 1, 2022. REUTERS/Dado Ruvic 2/6

(Inserts dropped word 'time' in 2nd paragraph)

By Vera Eckert

FRANKFURT (Reuters) -Germany took steps to ramp up liquefied natural gas (LNG) imports on Thursday as it moves away from piped Russian supply, renting four floating storage and regasification units (FSRUs) and choosing the North Sea port of Wilhelmshaven as the first handling hub.

Demand for FSRUs has risen sharply as governments across Europe scramble to find quick ways to secure more LNG. They are a key part of Germany's strategy as it will take time to build more permanent LNG terminals.

Europe's biggest economy currently relies on piped Russian gas for almost a third of its supply, imports which totalled 142 billion cubic metres (bcm) in 2021. Berlin has said it could take until summer 2024 to end its reliance on Russian gas.

Germany committed to chartering two FSRUs on Thursday through utility Uniper and to two 10-year deals with Norwegian vessel operator Hoegh LNG to be completed by September or October, which will be operated by Uniper rival RWE.

The northern deep-sea port of Wilhelmshaven will be the first location to receive seaborne LNG in the winter of 2022/23, to be shortly followed by Brunsbuettel in Schleswig-Holstein.

The Economy Ministry last weekend said it wanted four FSRUs to speed the diversification of the country's energy in the wake of Russia's invasion of Ukraine.

Economy Minister Robert Habeck told reporters in Wilhelmshaven the terminals were part of the plan "to become independent of blackmail by Russia. A day like this makes me confident that it can work," he said.

The government has earmarked 2.94 billion euros for the FSRUs and plans to pass legislation shortly to give permits for the infrastructure.

"I believe the date, end 2022, early 2023 is technically realistic for the commissioning of the LNG landing point," said Hanns Koenig, an analyst with Aurora Energy Research. "But you have to get the gas."

Habeck has recently visited gas producing countries including Norway and Qatar, looking for alternatives to Russia.

The first of Germany's FSRUs will anchor in Wilhelmshaven, with a capacity of 7.5 billion cubic metres per year, equivalent to 8.5% of total German gas demand.

The other three will each have at least 5 bcm capacity, a joint statement by the Berlin economy ministry and Lower Saxony's environment ministry said.

The two Uniper ships will be chartered from vessel supplier Dynagas.

The gas arriving in Wilhelmshaven will be fed into Germany's pipeline grid via links to be provided by Niedersachsen Ports GmbH & Co. KG (NPorts) and in close cooperation with Uniper which is investing 65 million euros ($68.82 million) in the project.

A connection line from the port to existing long-distance gas transport pipelines and underground storage caverns is being built by regulated pipeline company OGE.

In the longer term the aim is to be able to switch to renewable gas and clean hydrogen at the site, in line with Germany's climate protection commitments.

"Using LNG contradicts the government's target of climate neutrality," said the managing director of the German arm of Friends of the Earth (BUND), Antje von Broock.

($1 = 0.9445 euros)

Germany ramps up capacity for LNG imports to replace Russian gas

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