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1st Mar 2024

Berlin ignored Brussels over number of LNG terminals

  • Overseas gas has replaced Russian gas supply (Photo: kees torn)
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Soon after Russia invaded Ukraine, the German economy ministry cleared the way for 12 new liquified natural gas terminals, vastly exceeding the two terminals needed, according to an EU Commission assessment.

On 5 May 2022, three German officials from the economy ministry met with commission officials and representatives of the bloc's gas transmission agency (ENTSOG).

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According to memos of the meeting first seen by German news site Table Media, ENTSOG, on behalf of the commission, assessed two extra LNG terminals — in Brunsbüttel and a floating terminal in Wilhelmshaven — could ensure supply and replace Russian gas in northern Germany.

Better connections to Belgium and France could further boost flows to Germany and alleviate bottlenecks caused by Russian president Vladimir Putin's gas cutoff.

"This would enable the full utilisation of the LNG capacities in Western Europe," the commission later wrote in its RepowerEU plan to wean Europe of Russian gas published later on 18 May.

In it, the commission again only mentions the need for two LNG terminals in Wilhelmshaven and Brunsbüttel to alleviate bottlenecks in northern Germany, adding that it was "generally important to avoid over-capacities that could become 'stranded assets' in the future."

But on 10 May, days after it had already met with the commission, the German cabinet approved the LNG Acceleration Act opening the door for rapidly permitting 11 new sites for onshore and floating LNG terminals —later expanded to 12—vastly exceeding the two sites deemed necessary by the commission.

Current planning envisages onshore terminals in Wilhelmshaven initiated by state-owned energy giant Uniper (first bailed-out then nationalised by the German government in the wake of the Ukraine invasion), Brunsbüttel spearheaded by RWE, and in Stade by project operator Hanseatic Energy hub. All could be operational by 2026.

In the meantime, six floating terminals (FSRUs) spread over four sites will be operational before the end of the year, and the cabinet decision allows for 12 terminals leaving room for further expansion of the plans.

Although the legal framework allows for 12 sites, that does not mean all will be built. But experts warn the German government risks over-investing in terminals that will become useless before their expected lifetime ends.

The six floating terminals can be dismantled relatively easily, but onshore terminals have "a service life of decades," researchers at DIW Berlin, a German research institute, warned in a paper published on Wednesday (22 February). "It is high time to stop the conversion from floating to fixed terminals and prevent LNG imports from becoming permanent."

No terminal capacity bottlenecks are expected in the winter of 2023-2024. Therefore, further expansion of LNG terminals is "neither necessary in terms of the energy economy nor sensible in terms of climate policy," the researchers concluded.

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