Germany Persists with FSRU Capacity Expansion Plans

Monday, 22 May 2023
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The German government is considering halving planned LNG import capacity in the Baltic amid opposition from residents and environmental groups but insists expansion must continue to ensure energy supply security even as import growth has slowed recently. German economy minister Robert Habeck has urged his federal state counterpart in Mecklenburg-Vorpommern to support planned projects in the Baltic to make use of spare transmission capacity left available by Nordstream’s demise.

The German government has been considering halving planned LNG import capacity in the Baltic, according to Reuters, as Berlin is weighing up the benefits of installing additional capacity against local resistance and an easing of winter’s energy crisis.

RWE exit

Moreover, German utility RWE has pulled out of two state-leased FSRU projects offshore the island of Ruegen, stating last month it was not interested in operating LNG infrastructure long-term. Bloomberg reported a lack of agreement between local and federal authorities that led to the frequent stalling of key decisions may have been a significant factor in RWE’s decision.

lng market tracker 22 may

Call for support

Nevertheless, the German government still intends to persist in expanding the country’s FSRU capacity, particularly in the Baltic. In a letter dated 5 May seen by the LNG Journal, Robert Habeck, Germany’s federal economy minister, has urged his federal state counterpart in Mecklenburg-Vorpommern to support the development of additional FSRU capacity in his state to ensure gas supply security. Habeck highlighted that the European Union still relies to some extent on Russian pipeline gas, but for which there could be no guarantee in the coming winter.

Adjust but don’t scrap

Accordingly, two additional floating terminals remain in planning by the German government even as their combined annual capacity could potentially be halved from roughly 13 million tonnes per annum (mtpa) to 7mtpa. They are to be located offshore the small industrial port of Mukran at Sassnitz, a Ruegen resort town.

Currently, Germany has one active terminal in the Baltic: The Deutsche ReGas-operated Deutsche Ostsee terminal that hosts the TotalEnergies-controlled Neptune FSRU. Deutsche Ostsee is Germany’s only privately funded LNG terminal. At the time of writing, it had imported a total of 0.42mmt since its commissioning cargo in December 2022. After RWE’s withdrawal, Deutsche ReGas was also tapped to become the operator of the two planned state-leased FSRUs. The company highlighted the German government would include the projects in its LNG Acceleration Act. 

Use available capacity

The two state-leased FSRUs would be located close to the floating LNG capacity already installed by Deutsche ReGas and regasified LNG would be fed into the German transmission system at Lubmin same as the LNG currently landed via the Neptune.  Notably, Lubmin was also the gateway for Russian gas via the Nordstream pipelines. This is a key factor in the German government’s focus on the Baltic as the transmission system in northwestern Germany is already at capacity, according to Habeck’s letter.

State- and private funding

Meanwhile, Deutsche ReGas still intends to expand its Deutsche Ostsee terminal by installing an additional FSRU and relocating the Neptune FSRU from its current moorings at Lubmin harbour to further out at sea, according to its website at the time of writing. This Phase II expansion would increase Deutsche Ostsee’s capacity to roughly 9.7mtpa by summer 2024. Phase II has been on Deutsche ReGas’ books since before the announcement it would take over from RWE in the Baltic. It now remains to be seen whether Deutsche ReGas will press ahead with installing three FSRUs. 

Public debate

Notably, the growth rate of cumulative LNG imports via German FSRU terminals has slowed considerably from up to 38pct week-on-week in January to around 7pct in May, our data show. As we have reported previously, this has prompted German pressure groups to warn of the wilful installation of overcapacity to the detriment of the environment. Nevertheless, Klaus Müller, head of Germany’s federal grid regulator Bundesnetzagentur highlighted that warnings of overcapacity missed the bigger picture as they were made in the context of a relatively mild winter. “To this extent, we should learn the lesson that previously we had insufficiently considered resilience, preparation and [structural] redundancies”, he said in February. In his May letter, Habeck also cites the Bundesnetzagentur as saying that without additional capacity at Lubmin, Germany’s gas storage levels are at risk of becoming critically low in case of a cold winter.

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