German utility Uniper has started construction work on the site of the country’s first liquefied natural gas import terminal in an effort to fast-track the development ahead of the winter spike in gas demand.
The terminal will involve the installation of a floating gas storage and regasification vessel, chartered from Greece’s Dynagas, in the North Sea port of Wilhelmshaven, which is the only German deep-water port than can be accessed without tidal constraints.
The German Federal Ministry for Economic Affairs & Climate Protection and Uniper are aiming to commission the LNG import terminal during the upcoming winter season.
The facility will provide annual import capacity of 7.5 billion cubic metres of natural gas, or about 8.5% of the country’s annual gas consumption, Uniper said.
The company said the state Trade Supervisory Authority in the city of Oldenburg approved the early start of work on the terminal, along with onshore and seaward port infrastructure.
Uniper submitted the application for the required permit and early start of construction to the Oldenburg authorities at the beginning of June.
“Here in Wilhelmshaven, we are currently demonstrating what the new German speed means: we are planning, approving and building at eight times [our] normal speed,” said Olaf Lies, Environment, Energy, Building & Climate Protection Minister for in Lower Saxony, where Wilhelmshaven is located.
“Every cubic meter we save will help us get through the next winter, and every cubic meter we import to Germany via alternative routes in the future will help us free ourselves more quickly from Russia's grip”, Lies added.
Uniper chief executive Klaus-Dieter Maubach said: “The rapid approval for the early start of construction shows the importance of the LNG terminal in Wilhelmshaven for the country’s security of supply. This cannot be taken for granted — above all, it shows what is possible when society, industry and politics pull together.”
Construction work began despite growing financial stress in Uniper, which has been unable to pass rapidly growing gas purchase costs on to its customers. The company said last week that it is in talks about a possible governmental bailout.
German helping hand
Under new legislative proposals from the government of Chancellor Olaf Scholz, German federal authorities may be able to take voting or non-voting stakes in companies related to critical infrastructure via the same mechanisms used to bail out companies during the Covid-19 pandemic.
Government ministries have agreed on amendments to the Energy Security Act that are to be voted on later this week in the German parliament, according to Reuters.
Uniper last week withdrew its outlook for the financial year 2022, alerting the market that expectations for earnings are now significantly lower than in previous years.
Uniper stated: “The background to this is the impact of the current gas supply restrictions by Gazprom. Since 16 June 2022, Uniper has received only 40% of the contractually committed gas volumes from Gazprom.”
Supplies to Germany via the Gazprom-controlled Nord Stream subsea gas pipeline have fallen by 60% since mid-June, with the Russian gas giant blaming international sanctions that have prevented the company from carrying out necessary equipment maintenance.
Nord Stream concerns
Adding to gas shortage fears in Germany and other European countries, Nord Stream's Switzerland-registered operator said that the delivery of Russian gas via the subsea pipeline will be fully halted on 11 July.
Maintenance works are planned to continue until 21 July, but industry observers have suggested that the resumption of gas flows across the pipeline may be delayed beyond the deadline.
Expectations of lower Russian supplies have further driven up gas prices in Europe, with Dutch TTF gas futures contracts for deliveries in August and September climbing more than 5% to trade at about €172 ($177) per megawatt hour on Tuesday.
Adding to worries is a strike by Norwegian offshore workers that is expected to shrink up to 60% of the country’s gas output.
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