Floating storage and regasification units are being deployed to fast-track today’s energy security, while underpinning future energy transition goals
Floating storage and regasification units (FSRUs) became a hot commodity in Germany in 2022 following the outbreak of the Russia-Ukraine war, as Europe scrambled to fast track its energy security with LNG imports.
Since the outbreak of the war, the German Federal Government has spent almost US$500Bn in its response efforts to replace lost natural gas volumes supplied from Russia and energy security, including the construction of new LNG receiving terminals.
FSRUs lie at the heart of Germany’s terminal philosophy. The country, which had no LNG import capacity in 2021, now has three FSRU-based receiving terminals operating, with a total of eight planned or proposed.
Höegh LNG is supplying three of the FSRUs, Höegh Gannet, Höegh Esperanza and Neptune, under long-term charters for the first German LNG receiving terminals in operation. Besides the three Höegh FSRUs, Uniper is chartering two Dynagas vessels, Transgas Force and Transgas Power, and another FSRU from Excelerate Energy.
In a deal struck in October, Big Board-listed Excelerate Energy will charter the FSRU Excelsior to Germany for five years. This charter supports the consortium of Tree Energy Solutions, E.ON, and Engie, which will jointly develop a German FSRU import terminal at Wilhelmshaven. Additionally, it lays the groundwork for the TES green hydrogen terminal at the port.
Under the terms of the agreement, the FSRU Excelsior will go on charter in Q1 2023 for deployment at the port of Wilhelmshaven. Excelsior has an LNG storage capacity of 138,000 m3 and send-out capacity of 5 billion cubic metres of natural gas per year (bcm/y).
FSRUs: infrastructure-light
Speaking at the 2022 Wells Fargo Midstream and Utility Symposium in New York City in December, Excelerate Energy president and chief executive Steven Kobos explained the attraction of FSRUs to Germany, the EU and long-term clean energy transition goals. “The Greens are a big part of the German coalition government and across the EU. They like FSRUs because they are infrastructure-light. You hear many in Europe saying they don’t like stranded assets. When I am in Europe, I tell people, if FSRUs weren’t already a thing, you would want to invent them. You would want some massive infrastructure that had residual value that was re-deployable, and you only need it as long as you need it. You are not going to have to pay a return on something for 50 years, though your transition goals may be sooner.”
Mr Kobos called FSRUs “incredibly cheap insurance” for the EU. “Forget the fog of war. Three years from now, who knows. Who knows what German industry is doing, where they are sourcing gas? What I do know is this — flexible import infrastructure; everybody in Europe is going to keep it because it is just pennies per mmbtu as insurance and an alternative. And any possible outcome, it’s there for the long haul.”
To support the development of the green hydrogen terminal, Uniper is conducting technical studies regarding the import of around 2.6 million tonnes of green ammonia per year at Wilhelmsen. This capacity, plus the 1-GW electrolysis plant for hydrogen production planned as part of the Uniper Green Wilhelmshaven project, could supply around 300,000 metric tonnes of green hydrogen, equivalent to 10-20% of the demand expected for 2030 throughout Germany.
“Uniper is now fully dedicated to the construction of the import terminal for green ammonia”
“After the successful construction of the LNG terminal in record time, we at Uniper are now fully dedicated to the construction of the import terminal for green ammonia and the construction of the gigawatt of electrolysis to supply our customers with green hydrogen,” said Dr Holger Kreetz, Uniper’s COO for asset management.
Wilhelmshaven terminal
Dr Kreetz was referring to Germany’s state-owned facility at Wilhelmshaven, which was the first FSRU-based LNG import facility to begin operations in the country. In December, terminal operator Uniper said commissioning of the new terminal was underway just two days after Höegh announced the arrival of its Höegh Esperanza in Wilhelmshaven. Höegh LNG signed a binding 10-year time charter contract with BMWK for the 170,000-m3 FSRU vessel on delivery.
The first cargo unloaded at the terminal on 19 December was transported by Tsakos Energy Navigation’s 170,000-m3 LNG carrier Maria Energy from Venture Global’s Calcasieu Pass LNG export facility on the US Gulf Coast.
On an annual basis, the terminal will deliver annual volumes of 5 bcm/y of natural gas into the German long-distance gas grid. This represents around 6% of Germany’s annual gas consumption, and according to Uniper, will replace about 11% of Germany’s gas imports from Russia.
Brunsbüttel terminal
In mid-January, Höegh LNG signed a 10-year charter for the FSRU Höegh Gannet, which is operating at the new Deutsche Energy Terminal in Brunsbüttel, Germany. The Elbehafen LNG project is developed by RWE and its subsidiary Elbehafen LNG, in close co-operation with Höegh LNG.
Lubmin terminal
Also launched in mid-January was the privately owned Deutsche Regas LNG Terminal, Deutsche Ostsee, in Lubmin, Germany. Underpinned by the 145,130-m3 FSRU Neptune, and chartered to TotalEnergies until 2029, the terminal was developed in record time, according to Deutsche ReGas managing director Ingo Wagner
“Almost half a year after submission of the first application documents, and less than four months after the start of the first construction activities in the port of Lubmin, we have all the permits necessary for operation,” said Mr Wagner.
“50% of Germany’s natural gas and one third of its oil came from Russia”
On 10 January, the LNG terminal began producing the first quantities of gas for transmission into the country’s gas network. In the meantime, Deutsche ReGas awarded contracts to TotalEnergies SE and MET Group as LNG suppliers for the German Baltic Sea terminal in Lubmin. With that, 80% of the annual capacity tendered in the tendering process for phase I – that is 3.6Bn m³ of 4.5Bn m³ – has been allocated as long-term capacities.
Logistical concerns
In a November report, Poten & Partners did voice concerns about the Lubmin project, due to the logistical constraints of the port. “Volumes must be shuttled to the port via three smaller vessels from a floating storage unit (FSU) in the Baltic Sea to the FSRU,” it noted. The FSU in question is the 137,814-m3 Seapeak Hispania, owned by Seapeak.
Deutsche ReGas inked a charter agreement with Anthony Veder for three LNG shuttle tankers, Coral Fraseri, Coral Favia and Coral Furcata, the last of which brought the first LNG cargo to the terminal on 30 December.
S5 Agency World is acting as terminal agent for the Deutsche Ostsee LNG terminal, managing the incoming clearance, pilot co-ordination and paperwork for three shuttle tankers working between the FSU Seapeak Hispania, moored near the port in the Baltic Sea, and the FSRU Neptune at the Lubmin terminal.
Anthony Veder chief executive, Jan Valkier, said the company has extensive experience in ship-to-ship operations worldwide. “We are looking forward to collaborating with all parties involved to successfully bring LNG via this new distribution route to Germany,” he said. The Dutch gas shipping company has a minor stake in the terminal.
Boluda Towage provides towing services at the port of Lubmin. Boluda Towage’s tugs helped to manoeuvre FSRU Neptune into position in Lubmin.
“They like FSRUs because they are infrastructure-light”
During the terminal’s second phase of development, starting in December 2023, a second FSRU will be installed offshore to increase the regasification capacity at the terminal to 11.5 bcm/y of natural gas, and Neptune will be moved from the port of Lubmin to an offshore location starting in mid-2024, increasing regasification capacity by a further 2.0 bcm/y. By mid-2024, regasification capacity at the Deutsche Ostsee LNG terminal will total 13.5 bcm/y.
Cost over-run
This rapid ramp up has not come without cost. Poten & Partners said the cost to the German Government for constructing the FSRU terminals is reportedly €3Bn (US$3.2Bn) over budget.
But 50% of Germany’s natural gas and one third of its oil came from Russia in recent years, leaving the country little choice but to beat a path to LNG. Germany enacted emergency energy measures when the EU pivoted from Russian energy, announcing multiple LNG import terminals, including five based on FSRUs.
Growing import capacity
As a result of investments in Germany and the rest of the EU and the UK, LNG import capacity will grow by about 5.3 billion cubic feet per day (bcfd) by the end of 2023 and a total of 6.8 bcfpd by the end of 2024, according to US Energy Information Administration data. This latter figure represents an increase of 34% in capacity compared to 2021 levels.
This sharp rise in terminal investment is in stark contrast with the previous 10 years, which showed LNG regasification capacity in the EU and the UK grew at a modest 2.8 bcfd (16%), from 17.5 bcfd in 2012 to 20.2 bcfd at the end of 2021, according to data from the International Group of Liquefied Natural Gas Importers.
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