Work Begins on Germany's First LNG Terminal

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Oil and gas company Uniper SE (Dusseldorf, Germany) has started work on Germany's first liquefied natural gas (LNG) terminal at Wilhelmshaven.

It is the first of four planned German LNG projects that Industrial Info is tracking, all of which are being fast-tracked by the German government in order to end its reliance on Russian gas. Ever since Russia invaded Ukraine in February, it has throttled gas supplies to Europe in retaliation to the European Union's (EU's) sanctions levied against it. Germany, which has a 90% dependence on gas imports, has no LNG terminals. Before the Russian invasion of Ukraine, its dependence on Russian gas stood at around 50%.

Uniper has kicked off construction on the LNG terminal and the onshore and seaward port infrastructure following an early green light from State Trade Supervisory Authority Oldenburg. The terminal will be capable of handling up to 7.5 billion cubic meters (Bcm) of natural gas per year--about 8.5% of Germany's current gas demand per year. The terminal needs to be brought online "as quickly as possible" Uniper stated, with commissioning expected this winter or early 2023. Subscribers to Industrial Info's Global Market Intelligence (GMI) Terminals Project Database can click here for the Wilhelmshaven project report.

"We are very pleased that things are now visibly getting underway," said Lower Saxony's Minister for the Environment, Energy, Building and Climate Protection Olaf Lies. "We need a replacement for Russian gas as quickly as possible, and we in the north are prepared to take responsibility for this. Every cubic meter we save will help us get through the next winter, and every cubic meter we import to Germany via alternative routes in the future will help us free ourselves more quickly from Russia's grip. Here in Wilhelmshaven, we are currently demonstrating what the new German speed means: we are planning, approving and building at eight times the normal speed. With such complex projects, this is only possible if everyone pulls in the same direction."

In May, Industrial Info reported that the German government had moved quickly to increase its 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 signed agreements to rent two FSRUs each from Hoegh LNG (NYSE:HMLP) and Dynagas LNG Partners (NYSE:DLNG). For additional information, see May 16, 2022, article--Germany Secures Four Floating LNG Carriers to Replace Russian Gas.

Uniper's work on Wilhelmshaven comes as the company faces major financial difficulties. It recently withdrew its outlook for the financial year 2022 with regard to adjusted earnings before interest and taxes (EBIT) and adjusted net income. It is also in talks with the German government about a possible bailout. "The background to this is the impact of the current gas supply restrictions by Gazprom. Since 16 June 2022, Uniper has received only 40% of the contractually committed gas volumes from Gazprom. Uniper uses flexibilities in its portfolio as well as substitution of volumes to ensure security of supply for its customers. However, Uniper currently procures substitution volumes at significantly higher prices. Since Uniper cannot yet pass on these additional costs, this results in significant financial burdens. There are also major uncertainties regarding the geopolitical situation, as well as the duration and scope of Russian gas supply restrictions."

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