German authorities have stepped up their drive towards ending reliance on Russian gas imports by supporting the charter of four floating storage and regasification units as an interim supply boost.
German utilities Uniper and RWE unveiled the plans for importing liquefied natural gas on Thursday following pronouncements by Chancellor Olaf Scholz and Economics & Climate Minister Robert Habeck on Wednesday.
RWE said it moved quickly “on behalf of and in the name of the German government” to charter two FSRUs from supplier Hoegh LNG, describing it as an important milestone in the effort to free Germany from its dependency on Russian gas.
Germany aims to reduce the share of Russian gas imports to 10% by mid-2024, against 55% in 2021 following Russia’s invasion of Ukraine and threats to cut off supplies.
RWE said the two FSRUs it has chartered have storage for up to 170,000 cubic metres of gas and will jointly enable the supply of between 10 billion and 14 billion cubic metres of gas to the German gas market annually.
The FSRUs are described as offering “a rapid interim solution” until the first LNG terminals on the German mainland are completed.
RWE will also manage the operation of the vessels, making all commercial decisions concerning the use of these assets to optimise them in the interests of the German government.
The conditions for the procurement of LNG on the world market will remain the responsibility of the German government and RWE will have the technical operation handled by Hoegh LNG.
The two FSRUs should be operating in time for the next European winter, RWE said.
The first unit will be moored in Wilhelmshaven, while several unloading sites for the second FSRU are being considered, such as Brunsbuttel, Rostock or Stade.
Uniper has signed letters of intent for the charter of two FSRUs managed by Athens-based Dynagas.
The Transgas Force and Transgas Power were both built in 2021 with a total natural gas send-out capacity of up to 7.5 Bcma and an LNG storage capacity of 174,000 cubic metres each.
The FSRUs will begin their service early next year with first gas send-out depending on the completion of the onshore installations at the sites selected by the German government, Uniper said.
Uniper chief executive Klaus-Dieter Maubach said: “We are glad and proud to be able to support the German government with our experience in the LNG market in these difficult times.
“Our site in Wilhelmshaven and the Dynagas’ FSRUs will provide an important cornerstone to achieve a greater diversification of natural gas supplies.”
The so-called Umschlagsanlage Voslapper Groden berths, near Wilhelmshaven, were upgraded this summer to handle large LNG vessels, including the design and construction of ship-to-shore connections.
Another connection to the gas grid 28 kilometres away — and thus a link to the Etzel storage facility — will be implemented by Germany’s Open Grid Europe before the beginning of winter.
In a second project phase to run until 2025, a permanent solution for the FSRU is to be implemented, Uniper said.
The plan for an infrastructure project in Wilhelmshaven also calls for additional unloading and handling facilities for hydrogen, expected to be imported as ammonia, Uniper said.
Uniper, as builder and operator of the terminal, will invest about €65 million ($69 million).
LNG Acceleration Law
The action by both utilities is supported by the federal government, including the proposed LNG Acceleration Law, a final draft of which is expected to be passed to the German parliament next week.
Speaking on Wednesday, Scholz said he wanted to see the bill passed before the summer parliament’s recess.
Habeck said the law would ease German permitting standards to allow issuing permits for LNG terminals and infrastructure within weeks rather than months.
The new framework is also expected to streamline procurement regulations to accelerate the award of public contracts and concessions, the Ministry for Economic Affairs & Climate Action said.
The federal government resolved to allocated funding of €2.94 billion to support FSRU projects, it added.
The ministry said that recent efforts to secure gas deliveries from Norway and on the LNG spot market had already reduced the share of Russian pipeline gas of total gas imports to 35% by mid-April, against 55% last year.
According to the ministry, Germany received 46 Bcm of gas from Russia in 2021, making it the largest foreign customer of Russia’s export monopoly, Gazprom. But officials say most of this can be replaced by LNG by implementing several steps.
Firstly, the federal government hopes to secure LNG and gas of up to 1 Bcm per year from the Netherlands in the short term.
Secondly, the four FSRUs operated by RWE and Uniper can gradually increase gas supplies to the grid to about 33 Bcm annually by summer of 2024.
More LNG terminals are planned, with a possible FSRU in Brunsbuttel under discussion. This unit may provide up to 8 Bcm of gas from 2026, according to the ministry.
However, for the upcoming winter the ministry expects an additional 7.5 Bcm of LNG only to be made available to the market from the Uniper-run project.
Together with short-term efforts by companies and private households to reduce gas consumption through energy efficiency, energy saving and electrification, the share of Russian supplies in gas consumption can be reduced to about 30% by the end of the year, the ministry said.
Independence from Russian gas can be largely achieved in a joint effort by the summer of 2024 when the share of Gazprom’s supplies is expected to decline to 10%.
FSRU installations are in operation in Lithuania, Italy, Croatia and Turkey with several additional locations around Europe being prepared.
Recharge’s Europe editor, Bernd Radowitz, contributed to this article. Recharge is Upstream's sister publication covering the renewable energy sector.
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