INTERVIEW: Germany's Stade LNG terminal ready for push into spotlight

London — The developer of the planned LNG import terminal at Stade in northern Germany has been buoyed by the interest already expressed in the project and plans to launch the key binding capacity bid process by the end of Q1 2021.

The 12 Bcm/year onshore Stade LNG terminal -- being developed by Hanseatic Energy Hub (HEH) -- is the largest of three LNG plants under development in northern Germany, according to the current project concepts.

HEH has remained relatively low profile compared with the two other German LNG projects -- the Uniper-backed 10 Bcm/year FSRU project at Wilhelmshaven and the RWE-backed 8 Bcm/year onshore LNG import terminal at Brunsbuttel.

Danielle Stoves, HEH commercial and regulatory director, said in an interview that the company was ready to move Stade to the next level of development.

"The time is right now to go from market interest to securing binding capacity contracts," Stoves said.

"By the end of 2020, the idea is to kick off with a non-binding phase to get interested parties up to speed on the project and the products we're planning to offer," Stoves said.

Depending on the feedback, HEH would then work with the market to fine-tune its capacity offering. "We want to be ready at the end of Q1 next year to open the binding phase," she said.

By next summer, it hopes to have signed capacity contracts ahead of taking final investment decision in the first half of 2022. Commercial operations are slated to begin in 2025.

In early September, HEH said it had already signed letters of intent with nine global market players interested in taking capacity at the facility.

"There is a lot of interest out there for regasification capacity at the moment," Stoves said.

Stoves declined to identify any of the companies that had signed LOIs, but said there was a "range of different parties interested in either bringing LNG to the German market or looking for capacity to be able to optimize delivery of cargoes on the global market, for example between Asia and Europe."

As well as designing products to suit market interest, a lot of other work was also being carried out in parallel to advance the project, including aligning engineering timelines, permitting and engaging with the regulator.

Competing projects

Stoves said the market would ultimately decide on how much capacity would be needed at Stade -- and whether there was enough demand to justify all three German LNG projects.

"There's definitely room for more than one. It's up to the market to decide whether it's two or three," she said.

"Each terminal is slightly different with different reasons why companies would be involved in them. We have a very good offering with flexibility and zero emissions as well as potential for future energy solutions" she said.

The recent high utilization rates at Europe's LNG import terminals was also a reminder to the market that capacity is not necessarily available to shippers if they haven't booked it, she said.

Booking long-term capacity is a way to guarantee a market for the LNG.

"Companies want to know they have a backstop for their LNG when they have long-term positions," she said.

Germany will certainly become more dependent on gas in the future as it phases out nuclear and coal-fired power generation. It will also need to replace gas traditionally imported from the giant Groningen field in the Netherlands which is set to close in 2022.

While increasing renewables can replace some of the lost capacity, gas would be needed to ensure system flexibility, Stoves said.

She added that Germany had a liquid traded gas market and good interconnection with other markets.

Stade, she said, has a number of competitive advantages including that it will be located on a brownfield site at the Dow industrial park and be zero emissions as it will use waste heat from Dow's processes to regasify the LNG.

"That's a key advantage of the location and the concept," Stoves said, adding that there is also local demand in the area for gas, as well as LNG by road and river, and only a short distance to tie into Gasunie Deutschland's pipeline network.