LNG

Trafigura, the global commodities trading firm, said its traded liquefied natural gas volumes declined slightly in the past year and while market volatility had eased the energy supply chain remained “brittle” amid changing inventories and continuing geopolitical concerns.

Uniper, the German utility almost brought down by the stoppage of pipeline natural gas supplies from Russia’s Gazprom and which is now importing LNG at Germany’s North Sea port of Wilhelmshaven, has suffered another setback by having to pay €550 ($602M) to a European LNG player after an arbitration ruling.

The Düsseldorf-based company, which had to receive a stabilization package from the German Federal government in 2022 to survive and reported net losses of €19 billion ($20.4Bln) in its most recent annual earnings, said the ruling came from an arbitration court over a contract concluded prior to the group’s spin-off in 2016.

Uniper said that the arbitration proceedings, under the rules of the International Chamber of Commerce, began in early 2021 and related to the pricing provisions of a long-term LNG supply agreement with an undisclosed counter-party.

Proceedings

“Uniper has been notified on 24 November 2023 of an award against a subsidiary in arbitration proceedings under the rules of the ICC which began in early 2021,” said the Uniper statement.

“The proceedings between the Uniper subsidiary and a European energy company relate, inter alia, to the pricing provisions of a long-term agreement for the supply of liquified natural gas (LNG), concluded prior to the spin-off of Uniper in 2016 and which has since expired,” Uniper explained.

“A payment to the opposing party of an estimated €550 million related to the retroactive re-pricing of the long-term agreement would be due under the terms of the award,” it added.

“The additional payment will have a full impact on the annual result of Uniper. Uniper is currently analyzing the reasoning of the decision and reviewing all possible avenues of legal recourse against the award,” stated the company.  

The 2017 report of the International Group of LNG Importers (GIIGNL) showed a 15-year contract under which Italian energy company Eni agreed to supply Uniper with 650,000 tonnes of LNG per annum between 2007 and 2022.

However, Milan-based Eni has so far declined to comment on the issue.

Uniper said in October 2023 that it expected adjusted earnings before interest and tax of between €6 billion to €7Bln and adjusted net profit of €4Bln to €5Bln.

Gazprom issues

Uniper was spun from German utility E.ON in 2016 and has also been involved in lawsuits against Gazprom, the former supplier of pipeline natural gas to Germany. At the time Uniper was under the control of the new owner, the Finnish power company Fortum.

However, Uniper was then formally taken over from Fortum in December 2022 in a deal with the German State that had included clearances from the European Commission to save Uniper from collapse.

Uniper itself had launched legal proceedings in 2022 against Gazprom which first cut and later suspended deliveries, sending Uniper into crisis.

Uniper’s bad luck was compounded in 2022 as it was also a buyer of LNG cargoes from the US Freeport LNG plant in Texas closed for part of 2022 and early 2023 by the June 8 fire.

The Wilhelmshaven LNG terminal commenced regular operations in March 2023, using the floating storage and regasification unit, the “Höegh Esperanza”.

The facility was developed by Uniper in record time and became the first German LNG import terminal to start operations on December 21, 2022, initially in trials. 

QatarEnergy President and Chief Executive Saad Sherida Al-Kaabi, told the Vancouver LNG2023 conference in Canada that as one of the largest LNG exporter, the Arab Gulf nation noted there were already concerns about energy security and affordability in the European Union even before the 2022 Russian invasion of Ukraine.

The German Parliament has voted to allow the development before the winter of a liquefied natural gas import facility in the port of Mukran on the island of Rügen and involving the “FSRU Transgas Power” vessel.

“The Bundestag and Bundesrat both voted on July 7 to allow the construction of an LNG terminal in the port of Mukran on the island of Rügen. Both voted for an amendment to the LNG Acceleration Act,” said a statement.

“The terminal in the port of Mukran should be available for this winter in about six months’ time,” added the Government statement.

Analysts note that the LNG import issue has become a key policy for Chancellor Olaf Stolz’s coalition Government and has caused a partial split with the Greens within the coalition.

Time limitation

The SPD in the Baltic Coast area of Mecklenburg-Western Pomerania, where the “FSRU Transgas Power” is to be deployed, are calling for a limitation on the duration of the FLNG project in Mukran.

Mecklenburg-Western Pomerania's state Environment Minister Till Backhaus, a member of the SPD, said that the applications for the planned LNG terminal have still to be thoroughly examined and were far from complete.

According to Backhaus, the responsible authorities in Mecklenburg-Western Pomerania will take a very close look at the applications and may seek amendments.

“From my point of view, the last word has not yet been spoken on the length of the project. We will not accept operating the LNG terminal for the current time span of 20 years,” stated Backhaus.

The Mukran terminal will be part of the operations of Deutsche ReGas GmbH, which has other vessels at the nearby Baltic port of Lubmin and signed an agreement in June 2023 with the Federal Government on deploying the “FSRU Transgas Power”.

Conditions

“The company will be the sub-charterer of the regasification ship to be used together with the ‘Neptune’ in Phase II of the LNG terminal ‘Deutsche Ostsee’ in the port of Mukran,” stated Deutsche ReGas.

It added that as agreed, Deutsche ReGas will assume the rights and obligations of the head charterer in the contract between the Federal Government and Greek shipowner Dynagas.

The Maltese-flagged vessel has 174,000 cubic metres of capacity. It was delivered to Dynagas in 2021 and has a regasification capacity of up to 7.5 billion cubic metres of natural gas per annum.

The Bundesnetzagentur (Federal Network Agency) allowed Deutsche ReGas, a private company, to set up LNG import facilities on the basis that a minimum amount of gas was imported.

Deutsche ReGas said that when the Mukran Port operation starts the total injection capacity of the Baltic LNG operations will total 13.5 Bcm per annum, which would be in accordance with the Bundesnetzagentur requirements.

The leading global commodities trader Trafigura has underpinned its trading pot by renewing its North American credit facility with over $4.5 billion of total commitments to help finance its growing trades in key US shale basins as it also boosts its LNG position in Europe.

Uniper, the German utility almost brought down by the stoppage of pipeline natural gas supplies from Russia’s Gazprom and which is now importing LNG at Germany’s North Sea port of Wilhelmshaven, said it was considering the legal implications of the seizure of its assets in Russia.

Jan 19 (LNGJ) - Höegh LNG Holdings has signed a second binding 10-year charter deal with the German Federal Government for a floating storage and regasification unit (FSRU) and has allocated the vessel “Hoegh Gannet” to the contract. “The vessel ‘Hoegh Gannet’ will be deployed for the Elbehafen LNG project in Brunsbüttel and operated by Deutsche Energy Terminal GmbH,” said Höegh.

   The Elbehafen LNG import project is being developed by Germany utility RWE. Another of the company’s vessels, the “Höegh Esperanza”, was allocated to the project at the North Sea port of Wilhelmshaven being operated by German utility Uniper. “We are proud to sign the second contract with the Federal Government of Germany for the new LNG import terminal in Brunsbüttel and look forward to starting operations together with RWE,” said Erik Nyheim, the President and Chief Executive of Höegh LNG.

Jan 10 (LNGJ) - While Northern Germany is dominating the nation’s LNG development, Southern Germany continues to make the headlines in German crude oil production. UK-based Neptune Energy has announced first oil output from its operated Rӧmerberg 6 well in the city of Speyer in the southwest state of Rhineland-Palatinate. Initial production tests indicate flow rates of up to 1,800 barrels of oil equivalent per day.

   “Römerberg 6 is the ninth production well on the field first discovered in 2003 and is expected to increase Neptune’s production in the Rhine Valley to around 3,700 barrels of oil equivalent per day,” said Neptune. “We are committed to further developing the Römerberg oil field and to increasing production capacity over the coming years,” said Andreas Scheck, Neptune’s Managing Director in Germany.

Uniper, the German utility that was saved from bankruptcy by Germany’s Federal Government after the halting of Russian pipeline gas supplies, has imported its first US LNG cargo to the floating import facility at the North Sea port of Wilhelmshaven.

German Chancellor Helmut Scholz has led an inauguration ceremony for the nation’s first LNG floating storage and regasification unit (FSRU), the “Höegh Esperanza”, at the North Sea port of Wilhelmshaven.