Liquid gas projects: In a hurry to the LNG terminals

With the help of liquefied natural gas (LNG), Germany wants to become independent of Russian gas imports as quickly as possible. Several systems are planned and some are already under construction. An overview of the status of the projects.

The construction work for a floating liquid gas terminal in Wilhelmshaven on the North Sea coast has started. With the project, the federal government is speeding up the expansion of the German LNG infrastructure. Where and by when should further plants be built? How quickly can LPG reduce dependency on Russian energy? What criticism is directed against LNG?

Is LNG an alternative to Russian natural gas?

Yes, in the short term. Since the federal government is sticking to the coal and nuclear phase-out, Germany initially needs more gas in the course of the transition to the desired switch to renewable energies. Liquid gas (Liquefied Natural Gas = LNG) has the advantage that it can also be bought in distant countries and transported by ship. The liquefaction at minus 162 degrees shrinks the volume enormously, which makes transport easier: 600 cubic meters of natural gas in gaseous form become one cubic meter of LNG. It is true that transporting and processing liquid gas is energy-intensive and technically demanding. But it can be delivered to a terminal at short notice and subsequently fed into the gas network.

What infrastructure is required for LNG?

Certain systems are required for the conversion of liquefied petroleum gas into natural gas. LNG terminals are required to heat and compress the liquefied gas, i.e. to process it into natural gas. The gas can then be fed into high-pressure networks through which conventional natural gas flows. At the terminals, the LNG can also be loaded onto smaller ships, freight cars or trucks. Because such stationary terminals cannot be built overnight, floating facilities are a worthwhile short-term alternative. Special ships can take the LNG from tankers on so-called Floating Storage and Regasification Units (FSRU) and convert it into gas on board.

How much liquid gas does Germany want to purchase?

So far, Germany does not have its own LNG terminal. For this reason, liquid gas has to be obtained from terminals in Belgium (Zerbrügge), France (Dunkerque) and the Netherlands. There are currently 37 LNG terminals in Europe, 26 of which are in EU member states. The federal government plans to build its own German terminals and floating facilities. The latter are said to have a combined capacity of up to 27 billion cubic meters of gas. This would be enough to replace around half of the previous Russian natural gas supplies.

Where does the LNG come from?

According to the Brussels think tank Bruegel, the EU imported around 50.4 billion cubic meters of LNG in the first four months of this year. That’s almost 20 billion more than in 2021. According to Cedigaz experts, Europe imported more than a quarter of its liquefied gas from the United States last year. Another 24 percent came from Qatar, 20 percent came from Russia. The EU also obtained larger quantities from Nigeria and Algeria. In the meantime, imports have shifted significantly. As early as January, the share of US deliveries in Europe rose to more than 50 percent, as reported by the US Energy Information Administration. According to KfW, the USA could become the largest LNG exporter by 2024. So far, Qatar and Australia have dominated the world market. The problem: Most LNG deliveries are tied to long-term contracts. According to S&P analysts, 80 percent of global gas supplies are covered by long-term contracts. In the short term, diverted gas could offset just 13 percent of European and UK imports from Russia.

Which projects are under construction and which are in the planning stage?

Germany plans to build two LNG terminals in Brunsbüttel and Stade. In addition, at least four floating systems have been built on the North Sea coast. The federal government has ordered four Floating Storage and Regasification Units (FSRU) for almost three billion euros. Two of them should go online by winter – in Wilhelmshaven and Brunsbüttel. Two more systems are to follow in May 2023. According to the Federal Ministry of Economics, Stade, Rostock, Hamburg and Eemshaven in the Netherlands are under discussion as possible locations.

The floating LNG terminal in Wilhelmshaven is currently in the lead, the construction of which has now begun with the first pile driving for a jetty where the LNG tankers will later be moored. According to the operator Uniper, the plant will cover 8.5 percent of Germany’s gas requirements in the future. The second floating LNG import terminal is scheduled to start operations in Brunsbüttel by the end of the year. Wilhelmshaven should become a kind of energy hub for Germany. Another floating installation of the north-west oil pipeline with nine billion cubic meters could go into operation there in autumn 2023. The gas from the terminal could be transported via an underground pipeline to the long-distance gas pipeline network in Etzel, East Frisia. The gas network operator Open Grid Europe wants to build a pipeline around 30 kilometers long.

The provisional floating LNG terminals are to be replaced by fixed facilities on land from 2025. The federal government has announced the rapid construction of two stationary LNG terminals in Wilhelmshaven and Brunsbüttel. The Belgian investor group TES plans to set up a landing site for LNG as part of a “Green Energy Hub” in Wilhelmshaven by 2024. In Brunsbüttel, German LNG Terminal GmbH wants to promote the construction of an LNG plant. The Dutch gas network operator Gasunie, the RWE Group and the state development bank KfW have indicated their interest in participating in the project.

In Stade, Lower Saxony, plans are also underway for an LNG terminal operated by Hanseatic Energy Hub GmbH. The port and shipping logistics company Buss Group, the Belgian pipeline operator Fluxys and the Swiss private equity company Partners Group want to participate in the consortium. At the end of March, the utility EnBW signed a declaration of intent to import three billion cubic meters of LNG annually via the Stade plant.

What does LNG cost?

The supply with LNG is likely to be significantly more expensive than with conventional natural gas. Due to the complex transport and processing involved, the price of LNG is usually higher than the price of pipeline gas. Most LNG quantities are tied to long-term supply contracts. New contingents have to be bought expensively on the spot market. Germany and the EU are in competition with Asia here. Many countries there have to replace coal with gas and pay high prices for LNG. In Japan, the LNG price was already almost twice as high as the German gas import prices in 2020.

What criticism is there of LNG?

The liquid gas projects in Germany are controversial. Environmental groups in particular have criticized the expansion plans for the LNG infrastructure. BUND complains that the use of LNG contradicts the federal government’s climate neutrality goal. The liquefaction of gas to LNG and the transport are very energy-intensive and could sometimes be more harmful to the climate than the use of coal. In addition, species protection would be at risk because the approval process would be suspended.