Germany is looking for solutions to secure its energy supply. Thus, it relies on LNG imports. The antitrust authority then approved the project of 3 German importers to coordinate the supply of 2 floating LNG terminals.
Since the Russian invasion of Ukraine, energy prices have soared. Since the closure of Nord Stream 1, these prices remain at a high level.
According to Platts, on August 26, the TTF price for the coming month reaches a record high of €319.98/MWh. Although it has fallen since then, it is still very high. On September 15, it was valued at €212.25/MWh. This represents a 220% increase over last year.
Germany secures its LNG supply
According to the Bundeskartellamt, the cooperation between Uniper, RWE and EnBW does not violate competition rules. It believes that the urgent nature of LNG supply outweighs any competition concerns. The 3 companies intend to cooperate in supplying the FSRUs in Wilhelmshaven and Brunsbuttel. In addition, they signed an MoU with the German Ministry of Economics in mid-August.
Andreas Mundt, President of the Bundeskartellamt, comments:
“The rapid commissioning of LNG terminals can create much-needed, price-reducing gas import capacity in a relatively short period of time. The resulting benefits to consumers outweigh any negative effects on competition.”
In fact, Germany has no infrastructure for importing LNG. However, the country intends to remedy this. Germany is accelerating work to develop 2 FSRUs, in Wilhelmshaven and Brunsbuttel. Thus, it intends to compensate for the reduction in Russian gas flows.
5 FSRU projects
To cope with the energy crisis, Germany is therefore banking on LNG. It then intends to develop 5 FSRU projects. As a first step, the country intends to rapidly expand the Wilhelmshaven and Brunsbuttel facilities. Both terminals will be operated by Uniper and RWE.
However, this is temporary. In the long term, a company created specifically for the situation will take over. In addition, EnBw and its subsidiary VNG will be responsible for supplying these FSRUs with LNG. The three companies will, in fact, be in charge of Germany’s LNG supply until March 2024.
The Wilhelmshaven and Brunsbuttel terminals will have a regasification capacity of 12.5 Bcm/year. Thus, for the first time ever, Germany will be able to import LNG directly.
All three companies benefit from the energy context. Wishing to avoid a shortage this winter, Germany is putting everything in place to ensure its supply. Andreas Mundt explains:
“Under normal circumstances, the cooperation between these three very important gas importers and wholesalers – and in particular the exclusive use of the terminals’ import capacities – would eventually have to be evaluated more critically. It was also important to us that the planned operator model was initially set up for a limited period until March 2024.”
While the three companies can coordinate LNG supply, they will have to supply LNG on a fixed quota basis. In short, they will source their LNG independently and market it separately.
Germany could nationalize Uniper
At the same time, Germany has begun talks with Uniper. The government could nationalize the company. In fact, in July, Germany had already announced that it was taking a 30% stake in the company. But as gas prices continue to rise, the government is reportedly considering taking a larger stake in Uniper.
In addition to Uniper, VNG is asking for stabilization measures to deal with the cost of purchasing gas. Faced with the reduced flow of Russian gas, the company purchased gas volumes on the open market. However, the prices are very high. Thus, Germany could also take a majority stake in the company.
