Germany Secures Four Floating LNG Carriers to Replace Russian Gas

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The German government has moved quickly to increase its liquefied natural gas (LNG) import capabilities in light of the Russia-Ukraine conflict by renting four floating storage and regasification units (FSRUs).

Committing funds of almost 3 billion euro (US$3.2 billion), the government has signed agreements to rent two FSRUs each from Hoegh LNG (NYSE:HMLP) and Dynagas LNG Partners (NYSE:DLNG). Hoegh's 10-year deal with the German Federal Ministry for Economic Affairs and Climate Action was facilitated by German energy major RWE AG (Essen, Germany). It will supply two, 300-meter-long FSRUs that will begin operations by the end of the year. RWE said that they will be capable of supplying between 10 and 14 billion cubic meters (Bcm) of natural gas per year. President and chief executive officer of Hoegh LNG, Thor Jørgen Guttormsen, commented: "We are very pleased and honored to be selected by the German government to support Germany's security of energy supply with two of our modern, large-capacity FSRUs."

Oil and gas company Uniper SE (Dusseldorf, Germany) facilitated the deal with Dynagas LNG for the supply of the FSRUs Transgas Force and Transgas Power, built in 2021, which have a total natural gas send-out capacity of up to 7.5 Bcm per year and an LNG storage capacity of 174,000 cubic meters each. The combined capacity is equivalent to approximately 30% of Russian gas imports into Germany, Dynagas stated. Service will start early next year with first gas send-out depending on the completion of the onshore installations at the sites selected by the German government.

Germany, which has a 90% dependence on gas imports, has no LNG terminals. Before the Russian invasion of Ukraine in February its dependence on Russian gas stood at around 50%. It has been working hard to cut that figure, and recently, Robert Habeck, Minister for Economic Affairs and Climate Action reported on progress. "In the last few weeks, we have made further intensive efforts with all the relevant stakeholders to import less fossil fuel from Russia and to broaden our supply base. Dependence on oil is down to 12%, the figure for coal is 8% and around 35% for gas. All of the steps we are taking are demanding a massive joint effort by all the stakeholders, and they are also generating costs, as is being felt by businesses and household consumers. But they are necessary if we are not to remain open to blackmail by Russia."

He added: "The proportion of gas imports coming from Russia dropped to around 35% by mid-April. To achieve this, the purchase of gas from Norway and the Netherlands has been stepped up, and LNG imports have been raised significantly. However, independence from Russian gas can only be achieved by a combined national effort. The Federal Government is working intensively...on bringing several floating LNG terminals into operation in Germany as early as 2022 and 2023. This requires a massive effort by everyone involved -- not least in order to put in place the technical preconditions, e.g. the construction of the connecting pipelines. Necessary statutory prerequisites to accelerate the construction of LNG terminals are currently being coordinated within the Federal Government."

Last week, the North Sea port of Wilhelmshaven was chosen as the site for the country's first LNG terminal, with the official construction ceremony attended by Habeck and Uniper. Subscribers to Industrial Info's Global Market Intelligence (GMI) Terminals Project Database can click here for the Wilhelmshaven project report.

"Russia's war against Ukraine has turned the world we live in upside down--this is especially true for the energy industry," said Klaus-Dieter Maubach, chief executive officer of Uniper. "We are doing our utmost to support the German government in its plan to diversify Germany's sources of supply for natural gas and, in the long term, also for hydrogen. With our LNG terminal, we are taking an important step--in close cooperation with the German government-- towards the desired energy independence. In the medium and long term, we are developing Wilhelmshaven into the energy hub of the future, with a focus on hydrogen and green gasses."

Industrial Info is also tracking RWE's Brunsbüttel project to build a port for handling LNG which will cover, among other things, a jetty with two berthing facilities for ships up to Q-Max size--the largest class of LNG ship--as well as facilities for distributing LNG by trucks, rail tank cars and smaller ships. Subscribers to Industrial Info's Global Market Intelligence (GMI) Terminals Project Database can click here for the Brunsbüttel project report.

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