Germany secures LNG supply via chartered FSRUs

Germany has formally confirmed its intention to have liquefied natural gas (LNG) terminals in Brunsbüttel und Wilhelmshaven ready at the turn of the year 2022/2023.

On 16 August 2022, Robert Habeck, Vice-Chancellor and Federal Minister for Economic Affairs and Climate Action signed a memorandum of understanding (MoU) with local energy companies Uniper, RWE and natural gas company VNG, which is majority owned by German regional utility EnBW, regarding the supply of the floating LNG terminals.

As explained, this means that there is now planning security for the supply and operation of the special ships, also known as floating storage and regasification units (FSRUs), which act as a terminal and convert the liquid gas back into a gaseous state.

The aim is to use these units at full capacity as soon as they go into operation in winter 2022/2023. This has been made possible by the introduction of the LNG Acceleration Act earlier this year.

To remind, in May, Germany entered into charter agreements to secure four FSRUs, representing one of the first big steps to cut the country’s dependence on Russian gas.

Specifically, the two terminals will be operated by Uniper and RWE on an interim basis until a special purpose entity takes over operations, the government said in a statement.

In addition to Uniper and RWE, EnBW and its subsidiary VNG are also responsible for supplying the FSRUs. The units will be chartered from Norway’s shipowner Höegh LNG and two from Greek Dynagas. 

Apart from the two floating LNG terminals in Brunsbüttel und Wilhelmshaven, two more will be located at ports of Lubmin and Stade.

This is expected to make an important contribution to the country’s gas supply security from the turn of the year 2022/23.

With an annual regasification capacity of up to 12.5 billion cbm, the terminals offer a direct opportunity to obtain natural gas for the German market from regions that cannot be reached by gas pipelines. The terminals thus increase the security of supply and contribute to more independence from pipeline-based natural gas imports.

“By importing liquefied natural gas, we are making ourselves less dependent on imports of Russian pipeline gas. This aspiration has remained imperative since Russia’s war of aggression against Ukraine. That is why the federal government chartered four FSRUs in the spring,” Habeck said.

“The first two are scheduled to start at the turn of the year 2022/23 in Brunsbüttel and Wilhelmshaven, and the planning and work for this are on schedule. The MoU offers the necessary security that these FSRUs will be fully utilized for the next two winters and thus make a maximum contribution to security of supply in Germany and Europe.”

The corresponding legally binding contracts are now being drawn up. With the MoU, the signatory companies declare their intention to fully utilize their delivery windows from the turn of the year 2022/23 to 31 March 2024.

In the future, it is envisaged that all federal FSRUs will be operated by special purpose entities that will be created in the near future.

Germany’s strategy is in line with efforts being made by the European Union to rapidly make itself independent from Russian fossil fuels and fast forward the green transition.

In May, the European Commission presented the REPowerEU plan which represents the EU’s response to the hardships and global energy market disruption caused by Russia’s invasion of Ukraine.