German LNG projects secure capacity commitments

Two of the country’s proposed import terminals sign MoUs with anchor customers

Stade’s 12 billion m³/year LNG regasification facilities and Brunsbuettel’s 8 billion m³/year LNG regasification facilities have both entered into Memoranda of Understanding (MoUs) with new capacity holders as capacity development continues. German LNG imports are gaining impressive momentum following the Ukrainian crisis. German utility EnBW is targeting at least 3 bcm/yr of capacity in the first project, while Shell has signed on for a “substantial part” of it.

Germany’s desire to wean itself off Russian gas as soon as possible, and the risk posed to its economy if Moscow decides to cut off the supply, have fueled the country’s appetite for accelerating alternative options. In the short term, it may be able to benefit from its pipeline links with existing LNG import infrastructure in the Netherlands, Belgium, France and the UK, which are expected to attract additional supply due to the premium on the price of European gas.

Plans for new floating regasification capacity with short lead times, such as a 600 mn ft³/d (17 mn m³/d) summer facility – could also increase overall LNG availability in northwestern Europe.

Public support

But German leader Olaf Scholz’s public support for Germany’s longer-term solution of developing its own terminals has galvanized the sector. German utility Uniper in early March reversed its April 2021 decision to pursue a hydrogen hub in Wilhelmshaven in place of its previous plan for a 10 bcm/yr LNG terminal, shifting the project back to a gas focus .

Stade and Brunsbuettel also accelerated their progress. Johann Killinger, managing partner of Hanseatic Energy Hub (HEH), the operator of Stade, complained as recently as the end of February that “the German conception of gas market regulation is disadvantageous for terminal projects compared to other ‘other European countries’, due to relatively high network access charges.

“Technically, commercially and in terms of the approval process, the [Stade] project is at a high stage of maturity » Stamatelopoulos, EnBW

The country should “quickly eliminate location disadvantages in Germany and bring network access fees…in line with other EU member states,” he said. Since then, his project has progressed, obtaining in particular the anticipated municipal approval of the town hall of Stade. HEH plans to submit approval documentation for the LNG terminal and port before Easter.

“We take the Chancellor’s clear commitment to LNG as an impetus to complete our processes quickly,” says HEH. “Therefore, we communicate closely with policy makers at national and regional level. The message we are getting is clear and strong: every terminal that can contribute to security of supply is important and highly valued. »

And, after initiating an Expression of Interest (EoI) process for international market participants to register their desire to reserve long-term capacity with a March 21-April 8 window, HEH has sealed the MoU. with EnBW more than a week before the end of the window. close. The utility is also “holding talks on other forms of cooperation” with HEH. The developer reports that the EoI process is “going well” and “will generate strong market interest”.

“Technically, commercially and in terms of the approval process, the [Stade] the project is at a high stage of maturity,” says Georg Stamatelopoulos, Board Member Sustainable Generation Infrastructure at EnBW. “The zero-emissions concept and the short connection distance to the German gas transmission network are also particularly relevant from our point of view.”

German LNG consortium champion Brunsbuettel has also been busy. In a sign of a significant change in the level of federal support, a reshuffle of consortium partners in early March saw German state-owned investment and development bank KfW join the project and sign a memorandum of understanding with Gasunie and RWE, which is not a partner in the terminal, but said it would reserve capacity there – “to move the project to a next phase and start construction”.

Gasunie, which operates the Dutch Gate terminal, will play the same role at Brunsbuettel. Two former shareholders, the oil logisticians Vopak and Oiltanking, have left the project, the former having already decided in November to switch from active to passive participation.

German LNG and Shell are now working on converting the MoU into “a binding agreement on the scope and duration of their partnership, and hope to complete it as soon as possible”. “The memorandum of understanding signed with Shell, together with the significant increase in market interest, demonstrates the importance of the import terminal at Brunsbuettel,” says Michael Kleemiss, Managing Director of German LNG.

James R. Rhodes