Analysis-As Germany joins the race to import LNG, a long and crowded track awaits


LONDON/FRANKFURT (Reuters) – Even if Germany can meet its goal of building two liquefied natural gas (LNG) terminals in two years, Europe’s biggest economy will barely be at the starting line in its race to replace Russian gas.

FILE PHOTO: A ‘natural gas’ sign is pictured at a RWE compressor station in the western town of Huenxe January 7, 2009. REUTERS/Ina Fassbender/File Photo

The terminals could regasify enough LNG to meet perhaps around a third of the supply Germany currently receives by pipeline from Russia, but Berlin must also secure supply in an already tight LNG market to supply them. .

Economy Minister Robert Habeck said last month that the terminals should be built at “Tesla speed”, referring to how the electric vehicle pioneer built its gigafactory near Berlin in just two years.

To facilitate the process, Germany is supporting two LNG terminal projects, one in the North Sea port of Wilhelmshaven and the other in Brunsbuettel near Hamburg.

Still, the challenges are clear, including Germany’s bureaucratic bureaucracy and tough environmental rules, raising doubts about the timeline among economists, advisers and even policymakers.

“Project development deadlines are going to be tough to meet,” said Greg Owen, vice president of business development at energy consultancy GLJ.

“Massive streamlining of regulatory approvals and social acceptance will be needed for these projects to get off the ground and given the legislative uncertainty, companies may need incentives and guarantees to invest,” Owen said.

It typically takes 2-3 years to build a regasification terminal once a final investment decision (FID) is made, Owen said. Adding a full LNG export terminal offering loading, unloading, transfer, liquefaction, processing and storage takes at least five years.


First and foremost, FIDs need to be met for the planned terminal in Brunsbuettel backed by state lender KfW, major utility RWE and Dutch grid company Gasunie and in Wilhelmshaven, which could be run by Uniper.

A spokesperson for the German LNG terminal, which is pursuing the Brunsbuettel project, declined to say when an FID would be carried out.

The project for a third LNG terminal in Stade, also located near Hamburg and supported by the Belgian Fluxys, Partners Group, the German Buss Group and Dow Inc, is also underway, but currently without government support.

Deutsche Bank’s senior economist Eric Heymann said it would take at least three years to build the first two terminals, adding that Germany’s plans to diversify away from Russian gas “face many challenges.” boundaries”.

Christoph Merkel, a partner at consultancy Merkel Energy, noted that Poland took nearly a decade to develop a policy to phase out Russian gas by 2023.

To do this, it had to almost double the capacity of its LNG terminal, build a gas pipeline to transport gas from Norway and develop gas links with Slovakia and Lithuania.

A temporary measure Germany is taking to facilitate small LNG imports is to procure the use of floating storage and regasification units (FSRUs), for which it has earmarked around €2.94 billion (3 .17 billion).

Utilities RWE and Uniper have secured three FSRUs, and there are currently talks of a fourth, some of which could enter service as early as next winter.


The fact that Germany now finds itself without an LNG terminal reflects plans shelved for years due to a lack of political and economic support, mainly because Russian gas was much cheaper and readily available.

By contrast, across Europe there are more than two dozen terminals, where buyers often source through long-term contracts, like their Asian counterparts.

“It’s a standoff right now, everyone is pulling the rope on their side, Europe and Asia, but this time Europe is not very resilient,” said Victor Tenev, consultant LNG sales representative at ROITI Ltd.

“(Germany) looked no further than Russian gas. If they had, they would already have had at least 15 billion m3 of LNG. »

To be able to attract enough volumes, several market participants have said that it is time for Berlin and the EU in general to sign long-term contracts of 15 to 20 years with the main producers to attract shipments.

Germany has pledged to spend 1.5 billion euros to secure short-term LNG supplies and is in talks on a long-term deal with Qatar, the world’s largest LNG producer.

Still, Habeck’s recent trip to Qatar showed how difficult it is to secure additional volumes as no deal was reached after initial news that one had been done.

Any additional volume is likely to be absorbed by Asian buyers, already Qatar’s main customers. In 2021 alone, China imported around 110 billion cubic meters (bcm) of LNG and absorbed 25% of new market capacity.

Germany consumes around 100 billion m3 of natural gas per year, of which around 55% comes from Russia and smaller volumes from the Netherlands and Norway.

Frank Mastiaux, CEO of German utility EnBW, estimates that Europe’s LNG terminals could supply 2,000 terawatt hours (TWh), or around 40%, of the continent’s gas demand, with Germany’s needs alone of 1,000 TWh.

“LNG alone cannot be the answer, as it would take about 10 new LNG production trains to replace recent Russian gas imports,” said Tamir Druz, managing director of Capra Energy.

($1 = 0.9268 euros)

Reporting by Marwa Rashad in London and Christoph Steitz in Frankfurt; Additional reporting by Vera Eckert in Frankfurt and Andreas Rinke in Berlin; edited by Jason Neely

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