Germany sees Russian gas share falling to 10% by mid-2024 amid floating LNG rush

Germany is to end its dependency on Russian gas by mid-2024 amid a rush to bring four floating LNG terminals online to supply some 33 Bcm/year, with the first of the FSRUs to be available in late 2022 and 2023, energy minister Robert Habeck said May 1.

The share of Russian gas has already dropped, from 55% in 2021 to around 35% by mid-April, the minister said, with even faster progress achieved for oil and coal where shares have dropped to 12% and 8% respectively. Germany is on course to phase out Russian oil and coal by late summer.

European gas and coal prices soared amid the scramble to secure alternatives and Platts assessed contracts for 2023 near all-time highs of Eur78.40/MWh for TTF gas and $211/mt for CIF ARA coal on April 29, data from S&P Global Commodity Insights show.

Platts assessed DES Northwest Europe LNG for June at $22.464/MMBtu April 29, a premium to Platts JKM, the spot-delivered price of LNG into Northeast Asia and Platts Gulf Coast Marker for US FOB cargoes, S&P Global data show.

Floating LNG

Berlin has taken up options for four floating LNG terminals (floating storage and regasification units, or FSRUs) with lease agreements set to be signed soon by energy companies Uniper and RWE, the ministry said, adding that it would provide Eur2.94 billion ($3.09 billion) in support.

The first two FSRUs will be located at Wilhelmshaven and Brunsbuettel and are due to start up later this year and in 2023.

For the other two, talks are ongoing over possible locations at Stade, Rostock, Hamburg-Moorburg or Eemshaven in the Netherlands, it added.

LNG import capacity is set to gradually increase from 7.5 Bcm/year for winter 2022/23 to 33 Bcm/year by summer 2024, when the government estimates the share of Russian gas in German demand will be reduced to 10%.

In addition, planning for two permanent LNG terminals at Brunsbuettel and Stade is on course for a start in 2026, with a view to fully phasing out Russian gas. Germany imported 46 Bcm of Russian gas in 2021.

Meanwhile, emergency planning to secure supply is also being advanced through new legal storage mandates for gas and coal and regulatory updates, including ownership issues, to prepare Germany for all scenarios including a halt to Russian gas flows.

Next winter

German gas storage facilities, which were 34.32% full as of May 1, have a new legal target to be 90% full by Nov. 1, the government said in its progress report.

The government supported the purchase of 950 million cu m of gas through market operator THE to go into storage by the end of May, it added.

In addition, Berlin has also secured up to 1 Bcm extra supply via the Netherlands for 2022 and boosted supply from Norway. Overall it listed 12 specific measures since the first progress report on March 25.

Beyond next winter, Berlin is also fast-tracking plans for accelerated wind and solar growth, kick-starting the move to hydrogen and outlining efficiency measures to reduce overall demand for natural gas, which will all contribute to reducing the share of Russian gas to 10% by summer 2024, effectively ending German dependency on Russian gas, the minister said.

For thermal coal, where Russia had an even higher share of supply in 2021, but seaborne alternatives are easier to secure amid a liquid global market in which Germany's total demand accounts for under 2%, Russia's share had already plunged to 8% in April. An EU import ban on Russian coal is set to start in August.

For oil, the share had already dropped to 12% in April, with the government helping to secure alternative supplies for two refineries -- Leuna and Schwedt -- in eastern Germany that relied on Russian oil via the Druzhba pipeline. Habeck said oil companies operating in the country (except Russia's state-controlled Rosneft) would now be able to end Russian oil supply in due course allowing for logistical planning of alternative supply routes.