Germany appears to be on the way to building its first liquefied natural gas (LNG) terminal. The US State Department already released a statement praising the decision, which may partly alleviate US President Donald Trump’s pressure for Europe to purchase US LNG to cut reliance on Russian gas.
The cities of Stade and Brunsbuettel are battling for federal approval and hundreds of millions of euros in investment. They are located on opposite banks of the Elber River, just downstream of Hamburg.
Regardless of which city wins the project, the end winner will be Germany, according to Oliver Grundmann, Stade’s constituency lawmaker from Chancellor Angela Merkel’s Christian Democrats.
Other sites, such as Wilhelmshaven in the northeast are also under consideration, after decades of reliance on pipelines to Russia, Norway and the Netherlands.
“The strategic relevance of diversifying our gas supplies via LNG is, I hope, by now a given,” Grundmann said. “The big question is who can build it fast and run it cost-effectively.”
There are numerous ports in Germany that wish to become LNG hubs, they were supported by Trump’s pressure on Germany to cut support for Nord Stream 2.
The pipeline project is still underway, and Germany fully supports it.
As reported by Bloomberg, supplies of gas to Germany from the rest of Europe are drying up, boosting Russia’s position as the primary source for heating, industry and power plants. Russia accounted for about 45% of Germany’s imports in 2017, an increase of almost 4% from the previous year, according to data from McKinsey & Co.
According to Grundmann, Germany requires LNG fast, with the need to switch from dirtier fuels after 2020. That is when International Maritime Organization limits on sulfur emissions kick in.
On Stede’s side, German consortium LNG Stade GmbH plans a terminal that will eventually be able to handle as much as 15 percent of Germany’s gas imports. It is co-financed by Co-financed by Macquarie Group Ltd. and China Harbour Engineering Co. and costing as much as $575 million.
As for Brunsbuettel’s project, it is a joint venture of gas infrastructure company NV Nederlandse Gasunie, Vopak LNG Holding BV and Oiltanking GmbH, bundled together as “German LNG Terminal.”
The decision to diversify Germany’s gas supply sources is an important concession, which Trump has achieved. He has been vocal against the Nord Stream 2 and EU dependence on Russian gas since he assumed office.
An option to diversify gas supply sources and not buy US LNG would be to improve the country’s pipeline links with Belgium and the Netherlands, more specifically with the underutilized Zeebrugge and Rotterdam LNG import terminals. The downside of such an approach is that the links would require the approval of all 14 German gas distribution companies. Which is unlikely to happen.
This follows the signing of a 20-year contract between Polish PGNiG and two subsidiaries of the US-based Venture Global LNG company on October 17th. The Polish gas giant aims to import up to 2 million tonnes of LNG from the United States annually over 20 years.
On the same day, Poland’s Prime Minister Mateusz Morawiecki told reporters in Warsaw that the deal, which is due to take full effect in 2022, would help reduce his country’s dependence on Russian gas deliveries.
The US pressure appears to be working as intended at least in regard to the energy sector in Europe.