Germany plans to increase the number of LNG terminals, but this winter more than half of the capacity of existing terminals in the country was idle. On the one hand, Europe went through a warm winter. On the other hand, LNG imports have become an expensive substitute for Russian gas. The head of the German RWE sees ahead not a strong recovery in demand, but destruction of demand in energy-intensive industries.
From November 1 to March 31, German LNG terminals were at less than half capacity. Instead of a possible 5.43 billion cubic meters, Germany accepted 2.69 billion cubic meters, according to GIE. The lowest indicators are at the private terminal in Lubmin. During the winter, it was loaded on average by only 13.5%, but the state ones in Wilhelmshaven and Bransbüttel were 74-76%.
As a result, Germany’s current gas imports during the heating season came from direct LNG shipments of only 7%, according to data from the Federal Network Agency. At the same time, Norwegian supplies amounted to 46.6% – 17.9 billion cubic meters.
It is obvious that the supply of regasified LNG to the country is higher, since German companies began to use capacities in the Netherlands and Belgium even earlier. However, they still cannot compete with supplies from Norway.
Reuters, citing documents from the German Ministry of Economics, reported that by 2030, only six LNG terminals should appear in Germany. One private one is in Lubmin with capacity expansion to 10 billion cubic meters. And five with a capacity of 27 billion cubic meters are funded by government funds. The German Ministry of Economics estimated that the cost of taxpayer funds would amount to 9.8 billion euros and this figure is not final.
However, the current capacity is already sufficient, since German enterprises are not enthusiastic about LNG. Obviously, German companies do not have to choose from which sources to increase imports. Russian gas supplies stopped at the end of August 2022 due to sanctions and counter-sanctions, and Berlin is unlikely to make a political decision to launch the surviving Nord Stream 2 line.
This has very specific consequences for German companies.
“Gas prices in continental Europe, especially in Germany, are structurally higher now because we are, after all, dependent on LNG imports. For Germany this is a disadvantage,” the head of the German energy giant RWE told The Financial Times. Marcus Kebber.
Since the peak of the energy crisis, gas prices have dropped significantly and have been trading for several months around $300 per thousand cubic meters. However, RWE is not optimistic about fuel demand in the country.
“You’re going to see a recovery in demand, and I think we’re going to see significant structural destruction of demand in energy-intensive industries,” Marcus Kebber said.
Head of Natural Gas Research at Goldman Sachs Samantha Dart also believes that some of the industrial capacity in Europe will not be restored. In her opinion, “returning to the pre-crisis state is a more serious problem.”
As The Financial Times notes, a survey conducted by the German Chamber of Commerce and Industry in September 2023 showed that 43% of large industrial companies plan to move their operations outside of Germany, with the United States being a priority destination.
On the one hand, gas prices are no less than three times lower. At the same time, the inflation law allows you to receive subsidies and tax breaks.
“German companies announced a record $15.7 billion in capital investment in US projects last year, up significantly from $8.2 billion the year before. This has eclipsed any other foreign direction,” fDi Markets quotes The Financial Times.
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2024-04-10 12:05:00
