Germany is opening its first liquefied natural gas terminal on Saturday

Germany opens its first liquefied natural gas terminal on Saturday. This is intended to prevent shortages and replace Russian supplies that have been disrupted by the war in Ukraine. Short-term supply, however, remains uncertain.

The ceremony, chaired by Chancellor Olaf Scholz, will take place on board the FSRU Hoegh Esperanza, which has been docked since Thursday at a brand new platform in Wilhelmshaven on the North Sea coast.

The boat is already loaded with enough Nigerian gas for the annual consumption of “50,000 homes” and will begin deliveries on December 22.

Five more floating terminals will follow within the year after construction sites are cleared thanks to billions of euros released by Berlin. French group Totalenergies’ private project in Lubmin (north) is also ready but awaiting administrative approvals.

In total, it should provide 30 billion cubic meters per year, or one third of Germany’s gas demand, eliminating the catastrophic scenarios of mass shortages mentioned just a few months ago.

Before the occupation of Ukraine, there were no terminals

Floating terminals allow natural gas to be imported in liquid form by sea. They consist of a mooring platform and an FSRU barge where liquefied natural gas (LNG) is brought in, stored and regasified before being sent to the grid.

Unlike other European countries, Germany did not have a terminal on its own soil, preferring the cheap resource from Russian pipelines, on which 55% of its imports depend.

Everything changed with the war in Ukraine and the suspension of supplies from Russia’s Gazprom. Liquefied gas imports to Germany through Belgian, Dutch and French ports have increased.

No significant contract

To avoid prohibitive transport costs, the country has decided to start several terminal construction sites in its territory. However, Germany has yet to sign significant gas contracts to immediately fill these terminals.

“The import capacity will be there. But what worries me is supplies,” said Johan Lilliestam, a researcher at the University of Potsdam.

An agreement was signed between the American company ConocoPhillips and Qatar for the Wilhelmshaven terminal. But the gas supply will not start until 2026.

German energy companies – led by RWE and Uniper – have been stalling talks between major world suppliers such as Qatar, the US or Canada.

Producers are trying to sign long-term contracts and make their investments profitable, while Berlin wants a short-term time to gradually become fossil fuel-free.

Concerned environmentalists

“Companies need to know that if we are to respect our goals (carbon neutrality, editor’s note), German purchases will become less and less important over time,” Economy and Energy Minister Robert Habeck said in late November. .

There is already skepticism among environmental groups, who fear LNG terminals will “fail to meet climate targets”. The DUH association announced “legal action” against Wilhelmshaven on Friday.

China recovery, cold winter, risks for 2023

Without a substantial agreement, Germany is therefore exposed to the volatility of short-term spot markets in order to sustain itself.

Prices have certainly fallen since the summer, but the market could tighten in 2023 as demand recovers in China, which is gradually abandoning its “zero-Covid” policy.

“If Europe has been able to buy so much LNG in recent months, it is because of weak Chinese demand,” said Andreas Schroeder, an expert at the ICIS Institute in London. China also signed a 27-year supply agreement with Qatar in November. According to Doha, “the longest period in history” for such an agreement.

The current winter in Germany, especially the cold one, may empty the tanks faster than expected. Klaus Müller, head of the National Networks Agency, recently warned: “Gas consumption is increasing. This is a risk, especially when the cold weather lasts longer.” Therefore, “we cannot rule out layoffs for next winter,” says Andreas Schroeder.

Therefore, the German government urges the population to continue their efforts to save the resource. According to Klaus Müller, Berlin’s goal is to save 20% on gas this winter, compared to “13%” at the moment.


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