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August 17, 2022

Germany secures LNG supply deal for two floating LNG terminals

The deal comes amid Gazprom warning that gas prices in Europe could surge by 60% this winter.

Understand the impact of the Ukraine conflict from a cross-sector perspective with the Global Data Executive Briefing: Ukraine Conflict


Germany has secured liquefied natural gas (LNG) supply assurance from energy companies for two new floating terminals as it looks to reduce reliance on Russian supplies.

Following sanctions imposed by Western nations on Russia for waging a war against Ukraine, Moscow has reduced gas flows via the Nord Stream pipeline to Germany, crippling its economy.

As a result, Germany has been seeking alternative sources of gas before winter.

The latest memorandum of understanding (MoU) has been signed by Germany Economy Minister Robert Habeck with energy companies Uniper, RWE’s RWE Supply & Trading, and German regional utility EnBW’s majority owned natural gas company firm VNG.

Under the MoU, the firms will temporarily supply LNG to the two floating storage and regasification units (FSRUs) in Brunsbuettel and Wilhelmshavenz.

The two FSRUs are planned to be fully supplied once they are commissioned, which is scheduled for later this year. The LNG will be supplied until March 2024.

Habeck was cited by Reuters as saying that the MoU was part of efforts “to make ourselves independent and less susceptible to blackmail from [Russian President Vladimir] Putin, and to give Germany a robust and resilient energy infrastructure, or in this case gas infrastructure.”

As per the numbers from research firm Enerdata, the two new FSRUs will have the capacity to receive up to 12.5 billion cubic metres of LNG a year, which is equivalent to approximately 13% of Germany’s gas consumption last year.

Uniper chief commercial officer Niek den Hollander said: “It’s about replacing part of the missing gas volumes from Russia very quickly this winter.”

Germany considers the two floating units as a ‘stopgap measure’ until it commissions two permanent LNG terminals to receive gas from around the world.

The MoU also comes as Russian state gas company Gazprom warned that gas prices in Europe could surge by 60% to more than $4,000 per 1,000 cubic metres this winter.

Gazprom was cited by Reuters as saying: “European spot gas prices have reached $2,500 [per 1,000 cubic metres]. According to conservative estimates, if such a tendency persists, prices will exceed $4,000 [per 1,000 cubic metres] this winter.”

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