LNG not a short-term alternative for Germany's energy supply

LNG, that is, liquefied natural gas at around –163°C, has potential for Germany's energy supply but is not an alternative to Russian pipeline gas for at least the next six to eight years. That is the tenor of a joint online seminar by Zukunft Gas e.V., an initiative of companies in the German gas industry, and Hanseatic Energy Hub GmbH. The latter, a joint venture of the Belgian group Fluxys, the investment firm Partners Group, and the regional Buss Group, is planning an LNG terminal in Stade. So far, Germany does not have a single such facility, unlike many European coastal states like Spain.

Planning and approval processes: up to five years

Based on the previous experiences of the Hanseatic Energy Hub in Stade, the planning and approval process requires a period of around five years, and the construction time an additional three years. Thus, the LNG terminal in Stade, whose planning began in 2018, could go into operation at the earliest in 2026. With increased political support, the planning and approval phase might be shortened somewhat, suspects Dr. Johann Killinger, managing partner of Hanseatic Energy Hub GmbH. But he does not consider larger time savings possible.

Three to six terminals needed

Germany would need a total of three to six LNG terminals to fully or at least partially substitute the current gas imports from Russia, which account for 55% of the import volume. One terminal can handle 10 to 12% of Germany's gas imports. The cost per terminal is around 1 billion euros. It should be noted that the utilization of such a terminal can never be 100% on an annual average, as it is dependent on the season. In other words: periods of high utilization are followed by months in which hardly any gas is landed.

"However, the signal to build LNG terminals can have a price-dampening effect on the market," says Dr. Timm Kehler, Chairman of Zukunft Gas e.V., seeing at least a current positive aspect in the current high-price phase, which began long before the Ukraine war and is likely to become more intense now, for the planning and construction of such facilities.

Utilize savings potentials

He currently recommends utilizing savings potentials, especially in the industrial sector. LNG terminals should also be prepared for climate-neutral gases such as green hydrogen, which would involve manageable additional expenditures. MdB Dieter Janecek, economic policy spokesman and head of the Economic Working Group of the Bundestag faction Bündnis 90/Die Grünen, also considers the joint gas procurement by the EU in the current crisis to be a short-term measure against shortages and price increases.