Decisive turning point: Germany inaugurates its first LPG terminal to cut dependence on Russia

Germany inaugurated its first floating liquefied natural gas (LNG) terminal this Saturday, built in record time within the strategy of the first European power to reduce its dependence on Russian hydrocarbons.

The head of the German government, Chancellor Olaf Scholz, his minister for economics and climate protection, Robert Habeck, and his finance minister, Christian Lindner, as well as the head of the regional government of Lower Saxony, Stephan Weil, presided over the formal opening ceremony of the terminal, at about 3 degrees below zero and amid a freezing fog, in the North Sea port of Wilhelmshaven.

“It’s a good day for our country and a sign for the whole world that the German economy will be able to stay strong,” Scholz said aboard a ship, dressed in a yellow vest.

The LNG carrier, known as the Floating Storage and Regasification Unit (FRSU), was christened “Hoegh Esperanza”.

The terminal, already loaded with Nigerian gas which can supply 50,000 houses for one yearthe supply will start on December 22nd.

more plants

Germany plans to open five more government-funded LNG terminals in the coming months, as well as private infrastructure.

“It is the first of five LNG terminals designed to replace Russian gas and ensure that no home runs out of supplies,” Scholz said in a brief statement.

“We built it in record time, an exponent of the new ‘German pace’ in decision making and execution,” he added.

“It is the new pace in Germany with which our infrastructure is advancing”, congratulated the head of government.

All these terminals together are expected to supply 30,000 million cubic meters of gas annually from 2023, which means a third of the country’s total needs.

Obviously Berlin has to find enough LNG to fill them.

The terminals allow the import of natural gas by sea which has been cooled and condense it into a liquid for easy transportation.

FRSU units store LNG and convert it into ready-to-use gas.

Until now, Germany did not have such terminals and 55% of its supply depended on cheap gas sent by pipeline from Russia.

But since the invasion of Ukraine, gas deliveries to Germany have decreased and Berlin has been forced to resort to LNG processed in the ports of Belgium, France and the Netherlands, paying a premium for transport costs.

The government has decided to invest to build its facilities as soon as possible e spent billions of euros in these new terminals.

import contracts

However, Germany has yet to sign any major long-term contracts to secure the supply of these terminals starting in January.

“The import capacity is there. But I’m worried about supplies,” University of Potsdam researcher Johan Lilliestam told AFP.

There is a contract with Qatar to supply the Wilhelmshaven terminal, but deliveries are not expected until 2026.

Suppliers want long-term contracts, but Germany doesn’t want to tie in with multi-year deals as the country aims to achieve carbon neutrality by 2045.

“Companies need to know that purchasing in Germany will eventually slow down if we are to meet our climate protection goals,” said Economy Minister Robert Habeck.

The DUH association, which is critical of the LNG projects, announced on Friday that it would take “legal action” against Wilhelmshaven.

a dozen of environmental activists protested in the city, with banners calling for an “end to gas”, according to an AFP reporter present at the scene.

Initially, the eurozone’s largest economy may be forced to buy LNG from spot markets, which will mean higher prices for consumers.

Chinese question

Also, the market may shrink next year due to renewed demand from China. that he is leaving behind his strict anti-covid policy, warned AFP Andreas Schroeder, an expert at the ICIS energy institute.

“If Europe was able to receive so much LNG in recent months it was because Chinese demand was low,” he said.

The Asian giant has signed an agreement to buy gas from Qatar for 27 yearsthe longest in history, according to the Arab country.

Germany has experienced a cold winter so far, which has reduced reserves faster than expected.

“Gas consumption is on the rise. This is a risk, especially if the cold continues,” said Klaus Mueller, director of the government agency that regulates the gas and electricity market.

There is a real risk that Germany will experience temporary supply disruptions in the coming months, Schroeder said.

Gas consumption is currently 13% lower than a year earlier, but the government wants the drop to reach 20%.

In Europe, the difference between supply and demand could reach 27,000 million cubic meters in 2023, according to a report by the International Energy Agency, equal to 6.5% of annual consumption.

Source: AFP

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