Germany looking to secure gas supplies from North Sea amid push to end reliance on Russian imports

Germany and Dutch privately-owned exploration and production company ONE-Dyas are discussing potential natural gas production in the North Sea in an effort to reduce the country’s reliance on Russian fossil fuels.

Following the beginning of the war in Ukraine, the German government has started reassessing its security of energy supply. With this in mind, the government has started discussions with the Dutch company ONE-Dyas about a possible natural gas extraction from a cross-border deposit in the North Sea between the Netherlands and Lower Saxony.

According to the Dutch news organisation NOS, the project is located above Schiermonnikoog and the German Wadden island of Borkum. Information on ONE-Dyas website shows that the field is located in Dutch waters c.20 kilometres north of Borkum, Rottumerplaat and Schiermonnikoog and lies approximately one and a half kilometres from German waters. The platform is expected to run entirely on wind energy, connected to the nearby German wind farm Riffgat.

The discussions between the German government and the Dutch company resulted in a draft of a joint declaration announced on Wednesday, which will be submitted to the state cabinet for a decision. The final approval for Germany’s participation in the project lies within the responsibility of the State Office for Mining, Energy, and Geology (LBEG).

Dr. Bernd Althusmann, Minister for Economics, Labour, Transportation and Digitization of Lower-Saxony, and Chris de Ruyter van Steveninck, ONE-Dyas CEO commented on these discussions on Wednesday.

The minister said that, following talks with ONE-Dyas, the two parties have found a way that does justice to both the national interest of the project with regard to the security of energy supply and local concerns, adding that the gas extracted on the German side would be made available to the German market.

He noted that the natural gas production from the area should only be possible as long as there is a demand for natural gas in the country. In addition, ONE-Dyas granted the State Office for Mining, Energy and Geology extensive control options.

“I am convinced that with the intended joint declaration we have created a sensible framework for possible natural gas production in German waters,” the minister said.

Chris de Ruyter van Steveninck, ONE-Dyas CEO, mentioned that the company has been in talks with German authorities ever since it made the discovery in this part of the North Sea five years ago.

Addressing the issue of the energy transition, he said that we still need natural gas supply while on our way to a carbon-neutral energy supply.

“Part of the energy transition should be ensuring that the natural gas we use is as environmentally friendly, affordable and reliable as possible. That’s what this European project will do,” he added.

However, as reported by NOS, the mayors of the two nearby islands are strongly opposing the development in the North Sea due to environmental concerns despite a report from the Ministry of Economic Affairs and Climate Policy concluding there would be minimal damage to the nature due to the project.

If approved, the first gas from the project could be delivered in 2024.

Following Russia’s invasion of Ukraine, the U.S. has banned all imports of Russian fossil fuels while the UK is working towards phasing our Russian fossil fuels by the end of the year. However, the European countries are heavily dependent on Russian imports and the EU has been working to secure its independence from the Russian fossil fuels ever since the war started.

With that in mind, the EU in March proposed an outline of a plan, which is supposed to make European Union member states independent from Russian fossil fuels well before 2030, starting with gas.

In an effort to combat this crisis, the EU’s REPowerEU plan will seek to diversify gas supplies, via higher Liquefied Natural Gas (LNG) and pipeline imports from non-Russian suppliers, speed up the roll-out of renewable gases, and replace gas in heating and power generation. The EU has also banned Russian vessels from its ports but it is still weighing additional sanctions related to the banning of Russian oil imports.

Meanwhile, Germany is working on setting up floating LNG terminals in the country and has recently allocated about $2.7 billion for four such terminals around the country. The funds will be used to operate the terminals for the next ten years and ensure the necessary infrastructure on land.

The government’s decision came as part of the efforts to become independent of Russian gas as quickly as possible and following the halt in the process of certification of the Russian-german gas pipeline, the Nord Stream 2.

With the same agenda in mind – reducing the reliance on Russian fossil fuels – Denmark has recently decided to speed up its renewable energy production and temporarily boost its gas output from the North Sea fields.

Moreover, European companies, like Equinor and Neptune Energy, have also recently committed to ramping up their gas production to meet European demand.

According to the International Energy Agency (IEA), Russia is Europe’s largest natural gas supplier, meeting 33 per cent of the region’s demand in 2021, up from 25 per cent in 2009. The IEA has recently made a downward revision to its forecast for the world’s gas demand this year. The revision to the forecast amounts to 50 billion cubic meters, the equivalent of about half of last year’s US liquefied natural gas exports. Global natural gas consumption grew by 4.5 per cent in 2021.

In related news, the UK has also moved to strengthen its energy security through a new strategy announced by the government earlier in April, committing to support oil and gas projects in the North Sea and speed up the deployment of renewable energy sources.

When it comes to oil and gas, a licensing round for new North Sea oil and gas projects is planned to launch in Autumn. With this decision, the government said it had recognised the importance of these fuels to the transition and to its energy security, and that producing gas in the UK has a lower carbon footprint than imported from abroad.