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Deutsche ReGas wins regulatory exemptions for new German LNG import facility

Highlights

Key approval needed ahead of commercial operations

Terminal set to be technically ready on Dec. 1

Deutsche ReGas FSRU one of six under development

  • Author
  • Stuart Elliott
  • Editor
  • Daniel Lalor
  • Commodity
  • LNG Natural Gas Shipping
  • Topic
  • Europe Energy Price Crisis

Privately-owned Deutsche ReGas -- which is planning to deploy a floating LNG import terminal at the German port of Lubmin in December -- has been awarded 20-year exemptions from tariff and network access regulation, it said.

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The 4.5 Bcm/year FSRU at Lubmin is one of six set to be installed in northern Germany, with the other five at Wilhelmshaven (two), Brunsbuttel, Stade and a second at Lubmin backed by the government.

"With the exemption from regulation, there is now another important requirement for the speedy commissioning of our LNG terminal," Deutsche ReGas chairman Stephan Knabe said in a statement.

Germany has no LNG import infrastructure at present, but efforts to develop a number of terminals have intensified since Russia's invasion of Ukraine in February and curtailments of Russian gas supplies to Germany.

Exemption from regulation is possible for LNG plants if they can show they improve gas supply competition and security of supply.

Deutsche ReGas said the regulatory exemptions awarded by regulator Bundesnetzagentur covered 20 years of operation and applied to a planned throughput capacity of up to 13.5 Bcm/year.

"In the course of the review, the regulatory authority did not identify any adverse effects on competition," the company said.

"In addition, the available expert opinions confirmed that the LNG terminal strengthened security of supply and competition in Germany and Europe," it said.

Knabe praised the regulator for its accelerated regulatory review, saying that what usually would take up to 18 months had been reduced by a factor of six.

First phase

For its first phase, Deutsche ReGas has chartered the Deutsche Ostsee FSRU from France's TotalEnergies, with the facility expected to be ready at the start of December.

The FSRU will initially be located within the port of Lubmin. The project would see a floating storage unit situated in the Baltic Sea where LNG tankers could offload their cargoes.

From there, three shuttle ships would transport the LNG to the FSRU in the port of Lubmin.

In late October, Deutsche ReGas said it had secured binding long-term capacity bookings of 3.6 Bcm/year for its first phase with terms of 5-10 years during its open season.

Any remaining capacity could be marketed on a short-term basis similar to other planned German LNG import projects.

In parallel, the company also ran a non-binding open season for capacity in a second phase of the project that will see regasification capacity expanded to 13.5 Bcm/year.

In the non-binding process for phase two, bids were received for the entire 8.1 Bcm/year of capacity with a 10-year term, Deutsche ReGas said.

In the second phase, the FSRU will be moved from the port to an offshore location where it will be combined with another FSRU, with a combined capacity of 13.5 Bcm/year. It is planned to deploy the second FSRU from December 2023.

Gas supply security is one of Germany's energy sector priorities, with the government rushing to fill storage stocks as well as secure LNG import infrastructure over the summer, despite record high prices.

Platts, part of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price at a record high of Eur319.98/MWh ($327/MWh) late August. It was last assessed at Eur110.50/MWh on Nov. 18.

First LNG

The FSRU at Lubmin is one of three projects expected to be ready to begin operations at the turn of the year.

The others are Uniper's FSRU project at Wilhelmshaven and RWE's Brunsbuttel facility.

Ultimately, the first three FSRUs will give Germany almost 20 Bcm/year of new LNG import capacity -- equivalent to around 43% of Russian imports in 2021 of around 46 Bcm. The terminals will initially operate at a lower capacity as they ramp up.

According to S&P Global analysts, Germany was expected to import around 9-11 Bcm over calendar year 2023, with the range stemming from how much might go into the country versus other Northwest European terminals.

Germany has repeatedly said it was relying on the timely startup of LNG imports, flagging the launch of commercial operations by the start of 2023 as one of three main elements for ensuring gas supply security this winter.

The other two are: continued efforts to reduce gas consumption by at least 20% to save gas; and maintaining a moderate balance between gas imports and re-exports through the peak demand season.