Germany Takes Steps To Encourage LNG Imports

The German government has approved improvements to the framework for development of LNG infrastructure in the country, the federal ministry for economic affairs and energy (BMWi) announced March 27.

The prospect of developing LNG infrastructure in Germany has been a point of speculation for some time. The draft regulatory reform is aimed at reducing the costs to private investors of building Germany’s first LNG import terminal.

“It improves the regulatory environment for LNG and equates LNG import terminals with pipeline gas landing points,” the BMWi said.

Under the new regulation, which still requires the approval of the federal council, network operators rather than LNG facility operators will be responsible for constructing pipelines to link LNG facilities with the network and for bearing the majority of the costs.

“To date, the connection of LNG plants to the transmission system has been an obstacle to the construction of LNG import terminals,” noted the BMWi in its statement, “because the high costs for sometimes very long lines can make LNG projects uneconomical. The regulation eliminates this obstacle.”

"For gas security of supply, it is important for Germany to be able to use as many supply routes and supply sources as possible,” energy minister Peter Altmaier added. “With this regulation, we are therefore removing investment barriers to the private construction of LNG import terminals…. It is now up to private investors to advance their plans for the construction of LNG terminals."

German utility Uniper is planning to build one at Wilhelmshaven although it will be owned and operated by Japanese Mitsui OSK Lines (MOL) following an agreement late last year; and the US major ExxonMobil is prepared to take a "signficant" amount of the capacity.

Uniper told NGW that it could not comment on the allocation of risk between itself and MOL, but said: "We want to get this project off the ground. After the terminal’s completion, we would see ourselves as an optimiser between gas procurement and marketing. We’re in discussions with policymakers and with companies from around the world that are willing to invest and that have the right know-how to make the project a reality at the lowest possible cost. We already know that this project is very competitive from a cost perspective."

The government has promised financial support for Germany’s first LNG import terminal, and has said it would offer an important opportunity to co-operate with the US. The Trump administration is keen to sell LNG to Europe, and has mounted opposition to Russia’s Nord Stream 2 pipeline to Germany. However, critics insist the government should be seeking to reduce the use of gas in order to meet environmental targets.