Full gas on LNG: Germany inaugurated its first liquefied gas terminal on Saturday, intended to avoid shortages and replace Russian deliveries, stopped by the war in Ukraine. But short-term supply remains uncertain.
“It’s a good day for our country and a sign for the whole world that the German economy will be able to stay strong,” said Chancellor Olaf Scholz, wearing a fluorescent yellow jacket, on the deck of a boat, a few meters from the Wilhelmshaven terminal, on the shore of the North Sea.
The FSRU boat (floating storage and regasification unit) ‘Hoegh Esperanza’, moored since Thursday regarding 300 meters away, sounded its siren as the head of state approached, in cold and foggy weather.
The imposing vessel, 300 meters long, is loaded with enough Nigerian gas for the annual consumption of ‘50,000 homes’ and will begin deliveries on December 22.
Five other terminals will follow
Five other floating terminals will follow in the year, following construction sites carried out at no load thanks to the billions of euros released by Berlin.
“This is Germany’s new rhythm with which we are advancing our infrastructure,” said the Chancellor. A private project of the French group Totalenergies in Lubmin (northern Germany) should also open quickly.
These facilities will provide a third of the country’s gas needs, removing – for the moment – the disaster scenarios of massive shortages still mentioned a few months ago.
Floating LNG (liquefied natural gas) terminals allow natural gas to be imported by sea, in liquid form. They consist of a mooring platform and a so-called FSRU vessel, where the LNG is delivered, stored and regasified, before being sent into the network.
Unlike other European countries, Germany had no terminal on its soil, preferring the inexpensive resource arriving from Russian pipelines, on which it depended for 55% of its imports.
Everything changed with the war in Ukraine and the end of deliveries from Russian Gazprom. Imports of liquefied gas to Germany, via Belgian, Dutch and French ports, have surged.
No contracts yet
To avoid prohibitive transport costs, the country has decided to launch several terminal construction sites on its own soil. But Germany has still not signed significant gas contracts to fill these terminals immediately.
‘The import capacity will be there. But what worries me are the deliveries,’ alarmed AFP Johan Lilliestam, researcher at the University of Potsdam.
A contract between the American company ConocoPhillips and Qatar has been signed for the Wilhelmshaven terminal. But gas delivery will not start until 2026.
Negotiations between German energy companies – RWE and Uniper in the lead – and the main world suppliers, such as Qatar, the United States or Canada, are slipping.
The producers seek to conclude long contracts, to make their investments profitable, while Berlin wants the short term in order to gradually do without fossil fuels.
‘Companies must know that, if we want to respect our objectives (of carbon neutrality, editor’s note), German purchases will be less and less important over time’, thus hammered at the end of November the Minister of the Economy Robert Habeck.
Within environmental associations, critical of LNG projects, the DUH association announced Friday “legal actions” once morest Wilhelmshaven. A dozen environmental activists demonstrated in the city, with signs asking for the “end of gas”, noted an AFP journalist.
Cuts
Without a significant contract, Germany is exposed to the volatility of the short-term spot markets to supply itself.
Prices have certainly fallen since the summer. But the market might tighten as early as 2023, due to the recovery in demand in China, which is gradually abandoning the ‘zero Covid’ policy.
And the current winter in Germany, particularly cold, might empty the tanks more quickly than expected.
‘Gas consumption is increasing. It’s a risk, especially when the cold snap lasts over time,’ recently warned the head of the National Networks Agency Klaus Müller.
Therefore, ‘we cannot exclude cuts for next winter’, estimates Andreas Schroeder, expert for the London institute ICIS.
The German authorities are therefore calling on the population to continue their efforts to save the resource. Berlin’s goal is to save 20% gas this winter, once morest ‘13%’ currently, according to Müller.
/ATS
