Germany Earmarks Billions for LNG to Sever Russian Gas Reliance
Sep 19, 2022
(Bloomberg) -- The German government has set aside billions of Euros for natural gas purchases in an effort to stave off an energy crisis since Russia cut off its supplies. Author of the article:
Gas pipes sit near a liquefied natural gas (LNG) storage tank under construction at Tokyo Electric Power Co.'s (Tepco) Futtsu gas-fired thermal power plant in Futtsu, Chiba Prefecture, Japan, on Monday, Sept. 10, 2018. Japan will maintain a target for clean energy to account for as much as 24 percent of the countrys power mix by 2030, according to a long-term plan approved by the Cabinet in July. Photographer: Bloomberg/Bloomberg Photo by Bloomberg /Bloomberg via Getty Images
(Bloomberg) — The German government has set aside billions of Euros for natural gas purchases in an effort to stave off an energy crisis since Russia cut off its supplies. Advertisement 2
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So far, the government has spent 1,474 billion Euros to purchase 0.95 terawatt hours of natural gas, according to a document seen by Bloomberg. The loads were procured from five companies between March 10 and June 1, the Economy Ministry headed by Robert Habeck wrote in a reply to a set of questions from the oppositional CDU/CSU parliamentary group. Financial Post Top Stories
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Germany’s economy has been particularly hard hit by the economic standoff with the Kremlin because of its reliance on Russian gas and oil. A looming gas shortage has touched off a debate in the government on how to ensure supplies while softening the blow of surging prices on consumers and companies. Recently, Germany seized the local unit of Russian oil major Rosneft PJSC and may takeover several more as it scrambles to prevent blackouts this winter. Advertisement 3
Earlier this year, German gas repositories were almost emptied as the nation sought to avoid Russian deliveries in the wake of Putin’s invasion of Ukraine. The federal government commissioned Trading Hub Europe GmbH (THE) to replenish inventories. To date, stockpiles stand at 90 percent of capacity, ahead and above of the state’s October 1 goal, according to German energy regulator Bundesnetzagentur. Whether Germany reaches its goal of 95 percent by November 1 depends on the weather and how it drives consumption once heating season starts. Initially 1.5 billion Euros were set aside for THE’s gas purchases. With that earmark nearly exhausted, the government has added another 2.5 billion Euros to the supplementary budget, according to the document. Altogether, credit lines of up to 15 billion Euros – which will be distributed in tranches – were set aside to fund THE’s gas purchase. Advertisement 4
Germany expects to deploy what are known as floating storage and regasification units, where liquefied natural gas is converted back into gas and fed into pipelines, in order to facilitate global imports. According to details from the Economy Ministry seen by Bloomberg:
First FSRU in Wilhelmshaven to start operations by Dec. 21, with planned pipeline capacity ~5 billion cubic meters, and expected average monthly costs of around $4.8 million for 10 years. Brunsbüttel will be connected to a pipeline of ~3.5-5 billion cubic meters, with a potential up to 7.5 billion by 2023. Monthly rental costs on 10-yr basis are ~$4.2 million. Stade and Lubmin – expected to start in November 2023 – are foreseen with 5 billion cubic meters. Contracts are on a 15-year basis and a volume of ~$4.6 million. However, the Ministry only sees about 3 billion cubic meters of gas, or around 32.5 terawatt hours, available between the crucial cold months of January and March 2023. The conservative opposition calls the floating terminal plan a “sham.”
“Even if the FSRUs were fully utilized, their contribution to covering our gas requirements would be far too small”, Mark Helfrich, spokesman for energy policy in the CDU/CSU parliamentary group, said to Bloomberg.