New German regulations for LNG installations come into force

Strong points

Creates a “trustworthy” regulatory framework for LNG plants

Six FSRUs in development on Germany’s northern coast

Some sites to be converted into permanent land facilities

New German regulations covering LNG import facilities came into force on November 18, paving the way for a number of new projects to begin operations as Berlin seeks to replace lost Russian gas supplies.

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A total of six floating LNG import terminals are currently under development in Germany – five supported by the German government alongside one privately funded facility.

The first three FSRUs – in Wilhelmshaven, Brunsbuttel and Lubmin – should be ready to start operations at the beginning of the year.

“The LNG Regulation creates a reliable regulatory framework for LNG plants and thus makes an important contribution to the security of gas supply,” Bundesnetzagentur President Klaus Muller said in a statement.

The regulator said it had been necessary to diversify German gas supply given the current geopolitical situation.

“In order to ensure the security of gas supply, floating LNG installations must come into operation this winter. A reliable regulatory framework had to be created before LNG installations could be used in Germany”, he said. he declares.

Capacity allocation, investments

The new ordinance regulates the main features of capacity allocation and management, as well as the determination of fees or the underlying determination of the operating costs of LNG facilities.

It also creates a regulatory framework regarding investment conditions for LNG facility operators.

The regulator said “the greatest possible legal certainty” was required for the operation of new LNG facilities despite the limited time to draft the regulations.

It is hoped that the settlement will support the current phase of LNG plant development to ensure security of supply and will also take into account the “very different marketing models” for LNG import terminals.

For two of the state-backed FSRUs expected to come online early this year – Uniper’s Wilhelmshaven site and RWE’s Brunsbuttel plant – it is expected that the two utilities as well as the EnBW subsidiary , VNG, will supply the LNG.

In August, Uniper, RWE and VNG signed a memorandum of understanding with the German Ministry of Economics on the supply of LNG to the two terminals to guarantee their full use until March 2024.

FSRU’s third imminent start is the Deutsche ReGas import terminal at the port of Lubmin, the only private sector-backed project under development.

At the end of October, Deutsche ReGas said it had secured binding long-term capacity reservations of 3.6 bcm/year for the first phase of the project through a tender process, without naming buyers. of capacity.

Three other state-supported FSRUs are in development and are expected to go live by the end of 2023 at: Stade (Hanseatic Energy Hub); Lubmin (RWE/Stena-Power); and Wilhelmshaven (TES/E.ON/Engie).

Germany’s economics ministry said in September that the Brunsbuttel and Stade FSRUs would only operate until the permanent land terminals come into operation in 2026.

Gas savings

Germany has repeatedly said it expects LNG imports to get off to a quick start, flagging the start of commercial operations by early 2023 as one of three key elements to ensure security of supply. in gas this winter.

The other two are: continuing efforts to reduce gas consumption by at least 20% in order to save gas; and maintaining a moderate balance between gas imports and re-exports during the peak demand season.

Gas consumption in Germany has already been well below average since the summer, as high prices and the continued promotion of gas savings have resulted in lower gas usage.

Platts, part of S&P Global Commodity Insights, priced the Dutch TTF benchmark price in the month ahead at a record high of 319.98 euros/MWh on August 26.

Prices have weakened since then on healthy gas storage levels and demand reductions, with Platts pricing the TTF price on November 17 at 115.48 euros/MWh.

James R. Rhodes