German LNG import terminal plans take a step forward

30 November 2017 15:32 Source:ICIS

Developers of an LNG import terminal in Germany have concluded Memorandums of Understanding (MoU) with several potential capacity holders at the future terminal and aim to finalise the deals next year, a source close to the matter said on the sidelines of the CWC LNG Summit in Lisbon on Thursday, 30 November.

The terminal would be run by an independent operator and is being developed by Dutch gas infrastructure and transportation company Gasunie, German logistics provider Oiltanking and Dutch storage provider Vopak.

The companies are in the process of forming a joint venture, which will be completed by the year’s end, the source said.

“Capacity sale agreements will be finalised next year, before the final investment decision is made in 2019,” the source said, adding that not all the capacity may need to be sold for the financing to be agreed.

The German LNG terminal will consist of one tank and a jetty, with import capacity of 5 billion cubic metres, about 3.7mtpa.

“We have the opportunity to increase capacity and facilitate supply on Q-Flex vessels,” said Eddie Lycklama, chief information technology officer at Gasunie.

The developers of the terminal are targeting a number of companies both in Europe and outside as potential capacity holders. The source declined to name the companies the MoUs have been signed with.

A representative of one of the German utilities told ICIS that the terminal idea sounded interesting but added it should be taken with a grain of salt, as this is not the first planned German LNG terminal.

A potential considerable rise of Russian gas pipeline supply via Nord Stream 2 may also make it more difficult to bring the terminal online, he said.

If the Nord Stream 2 project is agreed, Russian exports to Germany may increase by 2019, the year when an FID on the LNG terminal is due to be made.

Gazprom is targeting late 2019 for the launch of Nord Stream 2 operations, but the project faces opposition from a number of East European countries.

“Germany is the biggest gas market in Europe and what’s happening inside the country’s energy sector is the key to understand why the terminal is being developed,” the source said.

Around 55% of German gas supply comes from Russia, with the figure expected to rise further.

But supply from the Netherlands and local production, which amount to around 25%, will disappear over the next 10 years, leaving Germany with only Russian and Norwegian supply.

The LNG terminal is planned to diversify German imports, as the country is making a choice of gas over nuclear energy, coal and lignite.

All German nuclear power plants will be closed by 2022 and there is a political decision to bring down the use of coal and lignite.

“The question is how fast that will happen,” the source said.

The terminal would also offer small-scale truck and ship loading and conventional reload services.

Small–scale LNG would also be supplied from the terminal to the Scandinavian and Baltic states. ekaterina.kravtsova@icis.com

By Ekaterina Kravtsova