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German LNG Terminal Operator Sues EU Over Competitor's Subsidy

German LNG terminal
FSRU docked in Stade where construction has begun on the first onshore LNG import terminal (Deutsche Energy Terminal)

Published Aug 16, 2024 1:48 PM by The Maritime Executive

 

Two years after Germany rushed to launch its first LNG import terminals, the operators are struggling to gain the upper hand in the market as they move from temporary operations toward the future energy markets. The operator of the first terminal opened at Stade confirmed on Thursday that it has filed suit against the European Commission in a move to block government subsidies to one of its competitors.

After the Russian invasion of Ukraine, Germany launched an ambitious plan to gain energy independence ending its massive gas imports from Russia. The government led the efforts and formed partnerships with private companies to develop floating storage and regasification facilities. They entered into multiyear charters with the owners of FSRUs that could be docked in major German ports and linked to the existing gas infrastructure. The government reportedly committed up to €740 million for the development of the LNG import infrastructure and operations.

The first of the terminals was established in Wilhelmshaven with the FSRU Hoegh Esperanza and the FSRU Hoegh Gannet which was placed in Brunsbüttel. The government-owned Deutsche Energy Terminal was established to manage the floating terminals while separate efforts could proceed with the goal of building permanent facilities. After establishing the first two floating terminals, Deutsche Energy Terminal is also scheduled to position another FSRU, Excelsior from Excelerate Energy as a floating terminal on the Jade at Wilhelmshaven later this year and start operations of the Energos Force in Stade.

Completing Germany's import capabilities are two separate operations in Rugen and Mukran in Eastern Germany established by a private company Deutsche Regas. These projects were privately financed by Deutsche Regas.

The long-term plans call for the construction of permanent facilities both in Brunsbüttel and Stade. Work began in June 2024 in Stade to build what is being billed as Germany's first land-based terminal for liquefied gases. The design includes Europe's two largest LNG tanks, each with a capacity of 240,000 cubic meters, which critically are also being built ready for ammonia. The facility is scheduled to be online in 2027. The project in Stade is planned by the Hanseatic Energy Hub, for which the participants include Buss Gruppe, a Hamburg port logistics company, Swiss investment firm Partners Group, Spain’s Enagas, and US chemical company Dow. 

German LNG Terminals, which was established which with financial support through the German industrial bank KfW, also plans to develop a permanent terminal in nearby Brunsbüttel. RWE developed the initial infrastructure which is now managed by Deutsche Energy Terminals in conjunction with the floating terminal, while a separate company will be responsible for the onshore facilities. The German federal government has a 50 percent stake in German LNG Terminals along with Dutch pipeline operator Gasunie (40 percent) and German energy group RWE (10 percent).

The two onshore LNG terminals would provide permanent facilities that will be part of Germany's long-term energy plans. Both of the terminals are designed to handle forms of hydrogen derivates.

The German government filed with the European Commission and won approval in 2023 to provide a state subsidy for the development of the Brunsbüttel terminal. The European Commission approved an initial amount of €40 million and under certain circumstances, it could increase to a total of €125 million.

HEH is now seeking to block the subsidy arguing that the work at Brunsbüttel could and should proceed without government support. They contend the subsidy encourages the operators to be less economically efficient. They also said a normal business would have raised prices to customers to pay for its expansion.