German LNG sendout passes 2 Bcm mark with more terminals lined up

Once the biggest buyer of Russian pipeline gas, Germany has moved quickly to build out a significant volume of floating LNG import capacity as part of efforts to compensate for the lost Russian deliveries.

It already has three operational FSRUs across its northern coast, with more to come by the end of 2023 and several permanent sites also under development.

The first floating import terminal, developed on behalf of the German state by utility Uniper at Wilhelmshaven, began sending out gas into the national grid last December.

It was followed by the startup in January of the country's first privately backed FSRU at Lubmin in northeastern Germany and in March by an RWE-developed terminal at Brunsbuttel.

The speed at which the terminals became operational was notable, aided by quickly adopted legislation allowing for the acceleration of the permitting processes for new LNG import infrastructure.

According to data from S&P Global Commodity Insights, sendout from the three terminals passed the 2 Bcm mark on May 6.

The average sendout rate so far in May is 20 million cu m/d -- or around 7.3 Bcm on an annualized basis. Total German gas demand in 2022 was around 80 Bcm.

Capacity additions

The three sites have a current combined import capacity of almost 14 Bcm/year, but more capacity is set to be added by the end of 2023.

Deutsche ReGas, which developed the 5.2 Bcm/year Lubmin FSRU, plans to deploy a second vessel at the site by December, boosting total regasification capacity to 11.5 Bcm/year.

And after moving the first FSRU from the port of Lubmin to an offshore location in summer 2024, the regasification capacity will be further increased to 13.5 Bcm/year.

The RWE terminal at Brunsbuttel is also set for a capacity increase from 3.5 Bcm/year now to 7.5 Bcm/year in 2024 when the FSRU is moved from its current location to a new jetty and a new pipeline link to the grid is completed.

Another FSRU -- the 5 Bcm/year Excelsior -- is also set to be deployed in the fourth quarter of this year by Tree Energy Solutions (TES) in collaboration with Germany's E.ON and France's Engie.

And an FSRU is also expected to be installed at Stade in northern Germany before the end of 2023.

If all these developments proceed to plan, Germany LNG import capacity would be at least 36 Bcm/year from summer 2024 onwards. And there could be even more capacity ready by the end of 2023.

RWE was tasked by the government to develop, together with Stena Power, another 5 Bcm/year FSRU in northeastern Germany, initially envisaged to also be deployed at Lubmin by the end of 2023.

However, the status of the project is unclear, with uncertainty over its exact location.

German Chancellor Olaf Scholz and economy minister Robert Habeck visited the tourist island of Rugen in April for talks about locating LNG import infrastructure close to the island, plans that are fiercely opposed by environmentalists.

The LNG Acceleration Act has also been slammed by green groups that say key environmental processes are being bypassed.

A decision on where exactly to locate the terminal -- and whether one or two FSRUs could be deployed as part of the project -- is expected soon from the German economy ministry.

"Political decisions have to be made in Berlin," an RWE spokesperson told S&P Global.

The German government also said in March it was in talks with the operator of the Nord Stream 2 gas pipeline system about using spare pipes from the project to link any FSRU offshore Lubmin to the mainland.

Nord Stream 2 was completed in September 2021 but never started commercial operations despite the two strings of the pipeline being filled with gas in December 2021.

There remained spare pipeline not used in the construction of Nord Stream 2 after a shorter route via Denmark was ultimately approved.

"The inclusion of pipes from Nord Stream 2 AG is being considered for the construction of the FSRU site in Lubmin," Patrick Graichen, state secretary at the German economy ministry, said at the time.

Infrastructure operator

RWE, meanwhile, has repeatedly said it does not intend to remain an LNG infrastructure operator in the long term, with CEO Markus Krebber reiterating that position at the company's annual general meeting on May 4.

"We are doing this on behalf of the German government and we will hand the floating LNG terminals over to the relevant state-owned companies in the foreseeable future," Krebber said.

Under previous economy ministry plans, the five state-backed FSRUs were to be operated by the current developers on a transitional basis until a special purpose vehicle takes over the operation.

In January, the ministry said the newly founded, state-owned Deutsche Energy Terminal (DET) would be that vehicle and operate the five terminals.

As recently as March, the economy ministry said all five federal FSRUs would be in operation all year round in 2024 and 2025 and combined would provide a nominal regasification capacity of 27 Bcm/year.

The government also said last month that LNG was part of its efforts to ensure gas supply security, with a particular focus on the next two winters.

European gas prices for next winter delivery are well above prompt prices.

Platts, part of S&P Global Commodity Insights, assessed the TTF Winter 2923 contract on May 5 at Eur54.58/MWh compared with a front-month assessment of Eur36.28/MWh.