New German Regulation For LNG Facilities Enters into Force

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credit: alvarez-unsplash
  • Creates ‘reliable’ regulatory framework for LNG plants
  • Six FSRUs under development on Germany’s northern coast
  • Some sites to be converted to permanent onshore facilities

A new German regulation covering LNG import facilities entered into force on Nov. 18, paving the way for a number of new projects to begin operations as Berlin looks to replace lost Russian gas supplies, reports SP Global.

FSRUs 

The first three FSRUs — at Wilhelmshaven, Brunsbuttel, and Lubmin — are expected to be ready to begin operations at the turn of the year.

“The LNG regulation creates a reliable regulatory framework for LNG plants and thus makes an important contribution to security of gas supply,” Bundesnetzagentur President Klaus Muller said in a statement.

The regulator said it had been necessary to diversify German gas supply given the current geopolitical situation.

“In order to ensure security of gas supply, floating LNG plants are to go into operation this winter. A reliable regulatory framework had to be created before the LNG facilities could be used in Germany,” it said.

Capacity allocation, investments

The new ordinance regulates the main features of capacity allocation and capacity management, and the determination of charges or the underlying determination of costs for the operation of LNG plants.

It also creates a regulatory framework regarding the investment conditions for LNG plant operators.

The regulator said the “greatest possible legal certainty” was required for the operation of the new LNG facilities despite the limited timeframe for drafting the regulation.

It is hoped the regulation will support the current phase of LNG plant development to ensure security of supply and also take into account the “very different marketing models” for LNG import terminals.

For two of the state-backed FSRUs expected online at the turn of the year — Uniper’s Wilhelmshaven site and RWE’s Brunsbuttel plant — it is expected that the two utilities along with EnBW subsidiary VNG will supply the LNG.

In August, Uniper, RWE and VNG signed a memorandum of understanding with the German economy ministry on the supply of LNG into the two terminals to guarantee their full use until March 2024.

The third imminent FSRU startup is Deutsche ReGas’ import terminal at the port of Lubmin, the only privately-backed project under development.

At the end of October, Deutsche ReGas said it had secured binding long-term capacity bookings of 3.6 Bcm/year for the project’s first phase as part of an open season process, without naming the capacity bookers.

Three other state-supported FSRUs are under development and are due online by the end of 2023 at: Stade (Hanseatic Energy Hub); Lubmin (RWE/Stena-Power); and Wilhelmshaven (TES/E.ON/Engie).

The German economy ministry said in September that the FSRUs at Brunsbuttel and Stade would be operated only until permanent onshore terminals go into operation in 2026.

Gas savings

Germany has repeatedly said it is relying on the timely startup of LNG imports, flagging the launch of commercial operations by the start of 2023 as one of three main elements for ensuring gas supply security this winter.

The other two are: continued efforts to reduce gas consumption by at least 20% in order to save gas; and maintaining a moderate balance between gas imports and re-exports through the peak demand season.

Gas consumption in Germany has already been running well below average since the summer, as high prices and continued advocacy for gas savings triggered more modest gas use.

Platts, part of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price at a record Eur319.98/MWh on Aug. 26.

Prices have weakened since then on healthy gas storage levels and demand curtailments, with Platts assessing the TTF month-ahead price on Nov. 17 at Eur115.48/MWh.

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Source: SP Global

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