Germany launches first liquefied natural gas terminal in the North Sea

Full throttle on LNG. Germany is opening its first liquefied gas terminal on Saturday, December 17. This terminal is intended to prevent shortages and replace Russian supplies interrupted by the war in Ukraine. But short-term supply remains uncertain.

The ceremony, presided over by Chancellor Olaf Scholz, will be held on board the FSRU.“Floating storage regasification unit”“floating storage and gasification plant”) Hoegh-Esperanza, has been docked since Thursday on a brand new platform in Wilhelmshaven on the North Sea coast. The vessel is already loaded with enough Nigerian gas for annual consumption “50 thousand houses” and will begin shipping 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. The private project of the French group TotalEnergies in Lubmin (North) is ready, but awaiting administrative approvals. In total, it should provide 30 billion cubic meters per year, or a third of Germany’s gas needs, eliminating the catastrophic scenarios of mass shortages mentioned just a few months ago.

No significant contracts have been signed

Floating LNG terminals allow natural gas to be imported in liquid form by sea. They consist of a mooring platform and an FSRU vessel where LNG is delivered, stored and regasified before being sent to the grid. Unlike other European countries, Germany did not have any terminals on its soil and preferred the cheap resource from Russian pipelines, on which it depends 55% for its imports.

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. 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. “Import power will be there. But it’s the deliveries that worry me.”Johan Lilliestam, a researcher at the University of Potsdam, is concerned.

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 global suppliers such as Qatar, the US or Canada.

Producers are seeking long-term contracts to make their investments profitable, while Berlin wants a short period to phase out fossil fuels. “Companies need to know this if we want to achieve our goals [de neutralité carbone]“German acquisitions will become less important over time.”thus, at the end of November, the Minister of Economy and Energy of Germany, Robert Habeck, gave a speech.

Skepticism prevails among environmental groups that already fear the environment “Failure to meet climate goals” According to LNG terminals. The DUH association announced Friday “legal action” v. Wilhelmshaven.

Save the resource

Without a significant deal, Germany is exposed to the volatility of short-term spot markets in order to sustain itself. Prices have certainly come down since the summer. But the market could tighten in 2023 due to the recovery of demand 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”, explains Andreas Schroeder, an expert at the ICIS Institute in London. China also signed a 27-year supply agreement with Qatar in November. Most “long history” For such an agreement according to Doha.

The current winter in Germany, especially the cold one, may empty the tanks faster than expected. Therefore, the German government urges the population to continue their efforts to save the resource. Berlin’s goal is to save 20% on gas compared to this winter “13%” According to Klaus Müller, the head of the National Network Agency.