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Germany in talks over spare Nord Stream 2 pipes as Denmark eyes object salvage

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Germany in talks over spare Nord Stream 2 pipes as Denmark eyes object salvage

Highlights

Pipes could be used for second Lubmin LNG import project

Spare pipes left over from Nord Stream 2 construction

Denmark planning to remove object close to Nord Stream 2

  • Author
  • Stuart Elliott
  • Editor
  • Daniel Lalor
  • Commodity
  • Natural Gas

The German government is in "confidential" talks with the operator of the Nord Stream 2 gas pipeline system about using spare pipes from the project for a new floating LNG import facility at Lubmin in northeastern Germany.

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Nord Stream 2 was completed in September 2021 but never started commercial operations despite the two strings of the pipeline being filled with gas in December 2021.

There remained spare pipeline not used in the construction of Nord Stream 2 after a shorter route via Denmark was ultimately approved.

The German government is now eyeing the pipes to be used in the construction of a link to tie a planned state-backed FSRU to the German shore at Lubmin.

"The inclusion of pipes from Nord Stream 2 AG is being considered for the construction of the FSRU site in Lubmin," Patrick Graichen, state secretary at the German economy ministry, wrote in response to a parliamentary question.

"The federal government is in confidential talks with Nord Stream 2 AG in this regard," Graichen wrote.

The answer was dated March 9 but was published on the ministry website this week.

FSRU deployment

Germany wants to have six FSRUs deployed along its northern coast by the end of 2023, with a second project at Lubmin under development by the government together with RWE and Stena Power.

It is one of five FSRUs backed by the German government, with two -- at Wilhelmshaven and Brunsbuttel -- already operational.

As well as a state-backed FSRU at Lubmin, another is due to be added at Stade and a second at Wilhelmshaven by the end of 2023.

The sixth FSRU in Germany is the privately-operated first FSRU at Lubmin.

Using existing pipe for the second Lubmin FSRU project would be much quicker than contracting for new pipes to be manufactured and delivered to the site.

Whether the German government finalizes a deal with Nord Stream 2 AG remains to be seen.

The company -- which was 100% owned by Russia's Gazprom -- is under the administration of Berne-based administrator Transliq and has been awarded several stays of bankruptcy with the latest set to run until July 10, 2023.

It was awarded a first provisional stay of bankruptcy by a Swiss court in May 2022 that was due to run until September, but it was then extended to January 2023 and again until July 2023.

Object salvage

The German talks over using spare Nord Stream 2 pipes come as Danish authorities look to salvage an object spotted close to the Nord Stream 2 pipeline.

One of the strings of Nord Stream 2 was hit by a sabotage attack in September last year along with both strings of the first Nord Stream pipeline system.

The second Nord Stream 2 string was unaffected.

It remains unclear who was behind the sabotage attacks, but investigations continue in Denmark, Germany and Sweden.

Earlier this month, Russian President Vladimir Putin revealed that an object had been identified on the seabed close to the Nord Stream 2 pipeline, which he claimed could be an explosive device.

The Danish Energy Agency said March 23 the relevant Danish authorities had investigated the object and assessed that it did not pose an "immediate security risk".

The agency has also invited Nord Stream 2 AG to participate in the salvage of the object, it said in a statement.

"In order to clarify the nature of the object, the authorities have decided to salvage the object with assistance from the Danish defense," it said.

"In this connection, the Danish Energy Agency has offered the owner company, Nord Stream 2 AG, to participate in the salvage."

'Smoke buoy'

According to the Danish defense ministry, the object is cylindrical and measures about 40 cm in height and about 10cm in diameter.

"It is possible that the object is a maritime smoke buoy, which is now being investigated further," it said.

The Danish Energy Agency, meanwhile, is awaiting feedback from Nord Stream 2 AG before the salvage operation can begin.

The attacks on the Nord Stream and Nord Stream 2 pipelines raised fears that other European gas infrastructure could be targeted.

Since the attacks, however, European gas prices have fallen from their record levels of last summer.

Platts, part of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price at Eur42.95/MWh ($46/MWh) on March 23, down from close to Eur320/MWh in late August.