German LNG plans receive boost as critics warn of stranded assets

Plans to build import infrastructure for liquefied natural gas (LNG) in Germany are quickly taking shape as more companies decide to invest, but NGOs and researchers are criticising the projects. US chemicals company Dow announced this week (11 April) it is taking a minority stake in the Hanseatic Energy Hub  (HEH) project in the city of Stade. The HEH consortium plans to build, own, and operate an import terminal for liquified gases on Dow’s industrial park in Stade. The LNG terminal could be operational by 2026, HEH managing director Johann Killinger told Handelsblatt. Stade is in competition with two other northern German locations – Wilhelmshaven and Brunsbüttel – for fixed onshore import terminals, which take several years to build.

In addition to these, the German government plans to lease so-called Floating Storage and Regasification Units (FSRU), one of which could be installed as early as this winter. The economy ministry told Tagesspiegel Background that it is in discussions over the details and that it is examining possible locations, including the ports of Wilhelmshaven, Brunsbüttel, Stade, Rostock and Hamburg. Due to the fallout of Russia’s war against Ukraine there is international competition for FSRUs, of which there are currently just under 50 worldwide, according to Tagesspiegel.

A recent report by the German Institute for Economic Research (DIW) concluded that Germany does not need its own import terminals. Researchers warned the projects do not “make sense due to the long construction times and the sharp decline in natural gas demand in the medium term,” and warned of stranded assets. NGO Environmental Action Germany (DUH) criticised plans for an import terminal in Stade, arguing that it will not help with the current energy crisis and will harm the climate. “Despite all the claims to the contrary by the developer and politicians, the terminal can only be used for the import of fossil natural gas,” said managing director Sascha Müller-Kraenner. This means that it will not contribute to the energy transition, but will cement our dependence on climate-damaging fuels for decades to come.

For years, it appeared there was no economic case for direct LNG imports to Germany as the country is well-connected for receiving cheaper gas through pipelines from its neighbours and also Russia. Moreover, European LNG import capacities for a long time were heavily underutilised. However, the wish to lessen reliance on Russia due to the country’s war against Ukraine; the possibility of Russia stopping deliveries, and high gas prices have revived discussions. The German government announced it will co-fund with a 50 percent stake the project in Brunsbüttel.