Page 5 - EurOil Week 17 2022

EurOil COMMENTARY EurOil

is imported. backing from German energy group RWE in
With its renewed focus on energy security, early March. RWE, Gasunie and state devel-
Scholz’s administration plans to look at ways to opment bank KfW signed a memorandum of
bolster domestic gas production, both onshore understanding (MoU) under which KfW would
and offshore. Last week, the government gave take a 50% stake in the facility and RWE 10%,
Dutch firm One-Dyas the green light to drill at a implying the pair will put forward the majority
new site in the German North Sea. of financing.
However, German gas supply has been in The 10 bcm per year Wilhelmshaven LNG
decline for years, falling from 7.2bn cubic metres project, backed by Germany’s Uniper, is also
in 2015 to 4.5 bcm in 2020. And while more pol- seeing a revival. Uniper has said recently it is still
icy support might help slow down the rate of prepared to pursue the project, even though in
this decline, it is unlikely to reverse it. Accord- the past it failed to secure sufficient interest in
ing to BP data, Germany has less than 20 bcm capacity bookings. The facility will be “hydro-
of proven gas reserves left, which means there is gen-ready,” according to Uniper, giving it a role
only enough to maintain the current output for to play in the German energy transition.
less than four and a half years. Wilhelmshaven is a deepwater port on
The president of Germany’s gas-rich south- Germany’s North Sea coast, further west than
ern state of Bavaria, Markus Soder, on April 10 Brunsbuettel, and needs only a 30-km pipeline
called for the federal government to lift its ban to be built for it to be linked with the national
on hydraulic fracturing, in order to unlock the gas grid.
development of the country’s shale gas resources. The third, and largest, of Germany’s LNG
But such a call is unlikely to be heeded, given the projects is Stade LNG, situated further down the
extent of public opposition to fracking. Elbe, although still with the capacity to receive
With limited prospects for domestic supply, Q-max LNG carriers. A non-binding round for
and with gas consumption continually rising, capacity that took place in February last year
from 74.6 bcm in 2015 to 86.5 bcm in 2020, it is indicated there was enough interest in the 12
no surprise then that Germany was open to the bcm per year facility. And a final investment If all three
idea of Russia funding the construction of a new decision (FID) is anticipated next year, although
pipeline all the way to its shore. it could well be brought forward. However, the terminals were
Before the war Nord Stream 2 had been antic- German government has not explicitly referred
ipated online later this year, once Germany’s to Stade LNG in terms of its support. completed,
energy regulator had finished the certification
process necessary for the pipeline to start pump- The developer is Hanseatic Energy Hub, Germany would
ing gas. But it now looks increasingly likely that whose shareholders include Belgium’s Fluxys, be able to cut
the pipeline will never be operational, or at least Switzerland’s Partners Group and Ham-
not in the foreseeable future. And if Germany’s burg-based Buss Group. Planning approval Russian gas
three planned LNG projects are realised, Nord is currently being sought for the €800mn
Stream 2 would no longer have any economic or ($877mn) project. supply by 30 bcm
commercial logic. If all three terminals were completed, Ger-
The proposed 8 bcm per year Brunsbuettel many would be able to cut Russian gas supply by per year by the
LNG project is situated at the mouth of the river 30 bcm per year by the late 2020s. But given that late 2020s.
Elbe, which is the entry point to the industrial Russia currently meets a third to a half of Ger-
port of Hamburg. At a cost of $450mn, the facil- man gas demand, which amounts to 86.5 bcm
ity will be equipped with a jetty and two berths per year, even this is not enough on its own to cut
to enable it to receive large LNG tankers up to gas ties with Moscow. But the government hopes
Q-max size. It will also be able to load tankers, to import additional volumes from Norway, and
trains and smaller vessels, and it will have two ramp up LNG imports indirectly via neighbour-
165,000 cubic metre storage tanks. ing countries.
The planning approval process for the project The government also wants to cut gas con-
began last year, and a consortium has already sumption by increasing energy efficiency and
been selected for engineering, procurement and replacing some supplies with green hydrogen.
construction (EPC). The companies behind the But with the ongoing phase-out of nuclear
German LNG Terminal partnership were orig- and coal power, and uncertainties about green
inally Dutch gas firm Gasunie, German storage hydrogen’s feasibility and how quickly the mar-
Oiltanking and Dutch storage group Vopak. ket for the fuel will emerge, it might do better to
But Vopak said in November 2021 that it was consider additional LNG import terminals if it
quitting. is serious about bringing Russian imports down
In a turn of fate, however, the project secured to zero. ™

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