Germany's LNG import plans at risk of delays

Germany's LNG import plans at risk of delays

Germany plans to start imports of liquefied natural gas this month are at risk of being derailed by the weather.

Strong winds, freezing temperatures, high waves or a combination have already interrupted some works on its first terminals, and could delay some of the projects due to launch by the end of the year.

Three import sites with more advanced works are expected to add capacity for more than 20 billion cubic meters of LNG per year - equivalent to more than 40% of the Russian gas that Germany imported in 2021. The longer these facilities take to become operational, the more exposed Germany will be in winter when heating demand grows and extra supplies become necessary.

There is one factor that is unavoidable for us now: the weather. That could be the main driver behind a possible delay, according to Uniper Chief Executive Officer Klaus-Dieter Maubach, whose company is building an LNG terminal in the northwestern port of Wilhelmshaven. We are confident that we can finish the construction of the project this year. Germany has slashed its dependence on Russian pipeline gas because of an unprecedented energy crunch, as it has rushed to import more LNG and to reduce its dependence on Russian gas. The government passed a law to speed up the approval times and put in place billions of dollars to charter import facilities. Companies have agreed with Berlin to arrange temporary supplies that will go through the new terminals.

LNG is essential for Europe to fill gas storage sites and prepare for the winter. Gas prices have gone down because of the continued arrival of cargoes from as far away as the US or Qatar at existing ports in Europe. The terminals are congested, with the new German facilities expected to ease the strains, as contracts are still four times higher than the average of the last five years.

Weather forecasts show that unseasonably cold temperatures will be forecast in Germany in the next two weeks, and could lead to new challenges for the projects development.

The privately-owned facility in Lubmin has already faced delays due to the harsh weather, according to its operator. While a floating terminal known as Neptune has recently reached the port of Mukran in Germany, taking it to its final destination in Lubmin will depend on the weather.

The weather always plays a significant role in an offshore project especially during the winter, according to Stephan Knabe, chairman of the Supervisory Board of Deutsche ReGas GmbH Co. KGaA. This means that if the wind is too strong and the waves too high, works on the ship can not be carried out and Neptune can't be transferred to the port of destination in Lubmin. The project - with capacity of 5.2 billion cubic meters - was first planned to start in the beginning of December. The necessary components and all infrastructure requirements are now ready, but Deutsche ReGas says further delays can't be ruled out.