Natural Gas

November 14, 2024

Germany instructs state LNG terminal operator to reject Russian LNG: report

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HIGHLIGHTS

FT cites letter from economy ministry to state-owned DET

Ministry previously asked companies to avoid Russian LNG

No EU-wide blanket sanctions against Russian LNG imports

Germany's economy ministry has instructed state-owned LNG terminal operator Deutsche Energy Terminal (DET) to reject any cargoes of Russian LNG that may attempt delivery, the Financial Times reported Nov. 14.

The FT cited a letter dated Nov. 6 sent by the ministry to DET that told the terminal operator "not to accept any deliveries of Russian LNG."

It came after the company reportedly informed Berlin that its import facility in Brunsbuttel was set to receive a Russian cargo.

The ministry said the instruction was given in order to protect Germany's "overriding public interests."

In comments to S&P Global Commodity Insights Nov. 14, a spokesperson for the economy ministry said it did not comment on any possible leaked documents.

But the spokesperson said: "In general, it is correct that Germany does not import Russian gas and it is also clear to the ministry that this must not happen via German LNG terminals."

A DET spokesperson declined to comment on the report Nov. 14.

There are no EU-wide blanket sanctions against the import of Russian LNG, with a number of EU countries -- including France, Spain, Belgium, and the Netherlands -- continuing to buy cargoes.

However, the German economy ministry already made the country's position with regard to Russian LNG clear in a pledge made in January 2023 shortly after operations started at its first floating storage and regasification unit at Wilhelmshaven in December 2022.

In written answers to parliamentary questions dated Jan. 26, 2023, the ministry said the German government was against the purchase of Russian LNG and would take measures to ensure companies avoided cargoes from Russia.

"The federal government does not support the procurement of Russian LNG. The government has communicated to companies that it will take appropriate measures where possible to exclude purchases of Russian LNG," it said.

The ministry reiterated its position in March 2023, saying: "The federal government continues to assume that no Russian LNG will be landed at the FSRUs chartered by the federal government."

Germany currently has four operational FSRUs -- state-backed terminals at Wilhelmshaven (Hoegh Esperanza) and Brunsbuttel (Hoegh Gannet), and two at the privately-owned Mukran terminal (Neptune and Energos Power).

There are plans for two final FSRUs -- one at Stade (Energos Force) and a second at Wilhelmshaven (Excelsior) -- to enter operation by year-end to bring the fleet to six.

Indirect supply

Even if Germany itself prevents Russian LNG cargoes from landing at its terminals, regasified Russian LNG can still flow into Germany via terminals in other countries such as France, Belgium, and the Netherlands.

In a response to a parliamentary question dated Nov. 6, 2024, the ministry said that to its knowledge no Russian LNG had yet landed at German LNG terminals.

However, it said it had "no information" on whether Germany imported Russian LNG indirectly.

It said that German state-owned trader SEFE had a long-term import contract for Russian LNG deliveries from the Yamal LNG plant that dated back to 2012 when it was part of the Gazprom group and trading as Gazprom Germania.

"This old contract gives rise to purchase obligations for SEFE, according to which contract volumes must be paid for even if they are not purchased," the ministry said.

"If the purchase does not take place, Russia could therefore sell the LNG on the world market and thus generate income for the same LNG quantities a second time," it said.

The ministry added that to its knowledge the contract was still being fulfilled, with SEFE using LNG terminals in other EU member states to purchase the LNG.

The ministry also said it did not expect pipeline deliveries from Russia to resume "in the foreseeable future."

Russian LNG deliveries to the EU have remained robust since the invasion of Ukraine.

According to data from S&P Global Commodity Insights, Russian LNG exports to the EU have reached 13.5 million mt so far in 2024, compared with 14.2 million mt for the whole of 2023.

France, Spain, Belgium and the Netherlands are the biggest importers of Russian LNG so far in 2024, the data showed.

It comes as spot LNG prices remain high. Platts, part of Commodity Insights, assessed the Northwest Europe LNG marker on Nov. 13 at $13.35/MMBtu.


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