Germany charters four floating LNG terminals, cutting dependence on Russia

Germany has entered into charter agreements to secure four floating liquefied natural gas (LNG) terminals, representing one of the first big steps to cut the country’s dependence on Russian gas.

As explained, the four floating LNG terminals, also known as floating storage and regasification units (FSRUs), will offer a rapid interim solution for landing LNG until the first LNG terminals are completed in Germany.

On 5 May 2022, Robert Habeck, Vice-Chancellor and Federal Minister for Economic Affairs and Climate Action, signed the charter deals to enable LNG imports in the near term.

The government has allocated up to €2.94 billion ($3.1 billion) for this purpose.

“Today more than ever we have to base our energy supply on more robust pillars. An accelerated energy transition is a be-all and end-all for a cheap, independent and secure energy supply. We need to triple the pace of expanding renewables on water, on land and on the roof and accelerate the ramp-up of water management. And that can only be achieved together,” Habeck pointed out.

The FSRUs are special ships able to take LNG cargo from LNG tankers, convert it back into the gaseous state onboard and then feed it into the gas network. Instead of three as initially planned, Germany has now opted for four FSRUs.

Two units will be chartered from Norway’s shipowner Höegh LNG and two from Greek Dynagas. They will be operated by German energy companies RWE AG and Uniper.

“On behalf of and in the name of the German government, RWE has chartered two special ships with which liquefied gas can be imported and fed directly into the German gas grid. In this way, the company is supporting the German government in strengthening the security of supply in Germany in the short term and in moving away from a one-sided energy dependency as quickly as possible. As early as next year, it will thus be possible to replace part of the Russian gas,” Andree Stracke, Chairman of the Executive Board of RWE Supply & Trading, commented.

Each of the two Höegh LNG vessels is capable of receiving up to 170,000 cubic metres of LNG via tankers in one unloading. With the two 300-metre-long FSRUs, between 10 and 14 billion cubic metres of natural gas can be made available to the German gas market annually. By comparison, the throughput of a land-based LNG terminal is between 8 and 10 billion cubic metres per year.

Under the ten-year charter contract with Höegh LNG, the plan is for the FSRU platforms to start operating as early as next winter.

One of the Höegh ships is already available and will be used in Wilhelmshaven at the turn of the year 2022/23. Work to prepare the infrastructure has already progressed here. Höegh’s second ship is scheduled to be stationed in Brunsbüttel at the beginning of 2023.

A location decision has yet to be made for Dynagas’ ships, but this should be done as soon as possible, according to the federal government. Stade, Rostock, Hamburg-Moorburg, or Eemshaven in the Netherlands can be considered as further locations for stationing an FSRU.

For the time being, the operational responsibility for the Höegh floating facilities lies with RWE, which will make all commercial decisions concerning the use of the ships and optimise these assets in the interest of the German government. RWE will have the technical operation handled by Höegh LNG.

The framework conditions for the procurement of liquefied natural gas on the world market are the responsibility of the German government.

Germany does not currently have its own LNG terminal, nor does it have any floating LNG terminals. Although there are LNG terminals in other EU countries, these capacities, however, are not sufficient to ensure sufficient provision in Germany. 

Expanding the LNG and green gas import infrastructure in Lower Saxony

Also on 5 May, the Federal Ministry for Economic Affairs and Climate Protection and the Lower Saxony Ministry for the Environment, Energy, Building and Climate Protection signed a letter of intent in Wilhelmshaven to expand the LNG and GreenGas import infrastructure in Lower Saxony.

The declaration is said to emphasize the importance of a parallel approach to infrastructure development. 

“On the one hand, it is about joint short-term solutions to diversify import opportunities. At the same time, we have to think about designing H2-ready infrastructures right from the start, because in the medium term we need to say goodbye to fossil imports completely,” the government said in a statement.

“I am … pleased that so many projects for the expansion of renewables and the import of hydrogen are being developed in the state of Lower Saxony. Only if we think about this alongside the development of infrastructure for LNG can security of supply be guaranteed in the long term. The federal government and the state of Lower Saxony will work closely together on this,” Habeck added.

“On the way out of the grip of Russian gas supplies, we in Lower Saxony are prepared to take responsibility. The projects that we are launching here today are not only of outstanding public interest. We are also showing that we will be able to do this at a completely new speed than we have been familiar with in our country – with a new speed in Germany,” Olaf Lies, Lower Saxony’s Minister for the Environment, Energy and Climate Protection, stressed.

“Today we are not just taking the first steps out of our dependency on Russian supplies. At the same time, we are also taking the first big steps towards a clean and independent energy supply.”

On Thursday, Habeck visited the planned EnergyHub in Wilhelmshaven where a major new project to produce clean hydrogen in Germany and store carbon dioxide underground in the North Sea is planned.

The visit coincided with the announcement made by German oil and gas company Wintershall Dea, which unveiled the BlueHyNow project that aims to produce 5.6 TWh hydrogen a year using green electricity and Norwegian natural gas.

Wilhelmshaven already boasts strong, networked infrastructure — two nearby landing points for gas from Norway, the possibility of hydrogen storage in neighbouring facilities, and a direct link to the planned German hydrogen network. It has a deep-water port where large tankers can also dock. What is more, CO₂ can also be transported from Wilhelmshaven. 

Germany’s first LNG terminal in the making

At a press conference in Wilhelmshaven, Federal Minister Robert Habeck and the Lower Saxony Ministers Olaf Lies and Bernd Althusmann also announced the construction of the first terminal for LNG in Germany.

Uniper, as builder and operator of the terminal, will invest around €65 million.

The first phase of the LNG terminal model will provide for the regasification of LNG via an FSRU that can be connected to the existing Umschlagsanlage Voslapper Groden (UVG) sea bridge. There, the LNG will be converted into gaseous natural gas. The gas will then be fed into the German natural gas pipeline system.

“Russia’s war against Ukraine has turned the world we live in upside down – this is especially true for the energy industry. We are doing our utmost to support the German government in its plan to diversify Germany’s sources of supply for natural gas and, in the long term, also for hydrogen,” Klaus-Dieter Maubach, CEO of Uniper, noted.

In the second project phase, a permanent and expanded port solution for the FSRU is to be implemented in parallel to the existing UVG. The plan is to provide additional unloading and handling facilities for green gases, e.g. ammonia, in order to be able to utilize the full potential of this new infrastructure project in Wilhelmshaven.

Germany supports EU’s sanctions against Russia

All of the aforementioned steps announced by Germany today support the country’s Ukraine crisis-accelerated clean energy push. This push toward renewables and energy independence has gained even greater prominence following the EU’s sixth package of sanctions against Russia. In the fifth sanction package, the EU started with coal. Now, the EU is addressing its dependency on Russia’s oil.

On 4 May, the European Union proposed a ban on all Russian oil imports, aiming to phase out Russian crude oil within six months and refined products by the end of the year. This was announced by European Commission President, Ursula von der Leyen, in light of the war in Ukraine.

Earlier this week, German Foreign Minister Annalena Baerbock said that the country was ready to support an EU-wide embargo on oil imports from Russia. In line with this, Habeck also shared his expectations for Germany to become fully independent of Russian crude oil imports by the end of summer 2022.

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