RWE expects to finalize binding German LNG import contract by end-2020

London — German utility RWE and German LNG Terminal, or GLT, -- the developer of the planned 8 Bcm/year LNG import facility at Brunsbuttel in northern Germany -- are close to finalizing a binding import contract and should complete the process by the end of 2020, the companies said June 18.

In September 2018, RWE agreed to a provisional deal to secure a "substantial" part of the plant's capacity, which was followed by similar deals with one unnamed company and Switzerland-based trader, Axpo.

RWE and GLT said they were now in the "final phase" of negotiating fully binding legal contracts for LNG imports and expected the process to be finalized by the end of 2020.

This, they said, would put German LNG "in a position to reach a positive investment decision."

The terminal is under development by Dutch gas grid operator, Gasunie, along with partners, Vopak and Oiltanking.

On June 17, Marcel Tijhuis, Gasunie's senior project manager for LNG business development, said the project should move to final investment decision in 2021 and had the potential to be expanded.

Germany currently has no LNG import facilities, but German utility Uniper is also developing a project involving a floating storage and regasification unit at Wilhelmshaven.

There are also plans for a third German LNG import facility at Stade, though these are less advanced.

Hydrogen imports

RWE and GLT also said June 18 they had signed a memorandum of understanding to promote the use of hydrogen produced from renewable sources -- so-called green hydrogen.

The terminal could be used to import green hydrogen in the future, they said.

"Hydrogen produced from renewable energy sources is in line with Germany's goal to become climate-neutral by 2050," GLT managing director Rolf Brouwer said.

"Domestic production will not be able to meet the anticipated future demand, posing the need for import of the climate friendly fuel," Brouwer said.

"LNG import terminals like Brunsbuttel can be combined with entry points for (liquid) hydrogen produced in other regions of the world where wind and solar energy are available at larger scale and lower cost than in Germany," he said.

Brouwer also said existing gas pipelines connected to the LNG terminal were "perfectly fit" to distribute hydrogen locally.

Javier Moret, global head of LNG at RWE Supply & Trading, said the company wanted to make sure it was prepared for the next "technological advancement."

"In the future hydrogen will play a key role as a climate-neutral fuel in the energy mix. We are prepared for this next step with the new agreement," Moret said.