Germany ramps up LNG | Aids EU members in Cutting Russian Gas Imports

Germany has pledged to aid European Union (EU) nations seeking to wean themselves off of Russian oil and gas – illustrated by assisting eastern states without ports in the North/Baltic Seas to gain access to Liquified Natural Gas (LNG).  In a meeting between Czech Prime Minister Petr Fiala and German Chancellor Olaf Scholz, Scholz made the point that countries like the Czech Republic are uniquely disadvantaged in a Russian embargo scenario – Russia gas imports constitute about 90% of the country’s gas consumption. Also, the Czech Republic is a landlocked nation (lacking port access to LNG networks) and relies on Russian gas via pipeline.

“We must be prepared to help countries that do not have direct access to the North or Baltic Sea and that must rely on us cooperating with them”, said Scholz

Germany also plans to ramp up its own LNG imports, renting four floating storage and regasification units (FSRUs), selecting the North Sea port of Wilhelmshaven as its first handling hub.  Last week we highlighted the that while LNG has great mobility advantages, the switch cannot be made overnight – it takes about 4 years to build an LNG terminal and then connect it to delivery routes internationally.  FSRUs are a key part of Germany’s strategy to gain ground while they build permanent infrastructure to support their LNG initiatives.

According to Reuters, Germany will charter two FSRUs through utility Uniper (UNO1.DE) and has two 10-year deals with Norwegian vessel operator Hoegh LNG, to be completed by September/October, operated by RWE (RWEG.DE).  The first of Germany’s FSRUs will anchor in Wilhelmshaven, with a capacity of 7.5 billion cubic meters per year, working out to 8.5% of total German gas demand.  The gas arriving in Wilhelmshaven will be linked to Germany’s pipeline by Niedersachsen Ports GmbH & Co. KG (NPorts) and in close cooperation with Uniper which is investing 65 million euros ($68.82 million) in the project.