Energy politics

A new German gas terminal could be an opportunity for US

Japan Climate Change
A tanker carrying the milk of environmentally-friendly kindness. Source: AP

When it comes to liquefied natural gas, Germany is oddly behind the times. The country does not have a single terminal for the fuel – also known as LNG – although there are plenty elsewhere: Four in France, three in Italy, six in the UK, seven in Spain and one each in Greece, the Netherlands, Portugal, Belgium, Poland and Lithuania.

But all this could soon change, with plans afoot for a new LNG terminal in Brunsbüttel, a town in the northern state of Schleswig-Holstein. Speaking to Handelsblatt, representatives of both the state and federal government expressed enthusiasm for the plan.

For the federal government, a new LNG terminal would help refute accusations by Donald Trump that Germany is dependent on Russian gas imports and that it deliberately hampers the import of US-produced gas. The US president recently condemned Nord Stream 2, a controversial new pipeline designed to increase imports of Russian gas to Germany.

Mr. Trump claimed that Germany’s heavy use of Russian fuel makes the country dependent on Moscow. But the dispute is commercial as much as geo-political. With fracking gas now very much on stream, the US has in recent years moved from a net importer to an exporter of gas.

The German public apparently sees through Mr. Trump’s arguments. This week’s poll by the RTL/n-tv Trendbarometer shows that two-thirds of Germans would like to see Nord Stream 2 built because they believe it would “better secure a supply of natural gas.” Also worth noting: They don’t appear to believe a word Mr. Trump says – 92 percent of Germans think the US president is primarily motivated by his desire to sell American gas to Europe.

Logistics, not politics

And Mr. Trump has made it clear that he wants Germany to increase imports of American LNG, as Poland has done in recent years. As part of contentious talks on US-European trade, the US government has pushed for improved access to the European market for LNG.

Despite what the German public may think, this is not necessarily a bad thing, according to the German government. Germany’s economy minister Peter Altmaier has insisted several times that his government is not opposed to shipments of American LNG.

“If the LNG coming out of the US, came to Germany at competitive prices, then that would be fine by us,” Norbert Brackmann, a member of Angela Merkel’s Christian Democratic party and the government spokesperson for maritime business, told Handelsblatt.

So the main problem now is logistical, not political. For decades, most of Germany’s gas has come at low cost via pipeline from Russia, Norway and the Netherlands. Natural gas is cheaper than LNG, which needs special shipping and handling facilities. And as of now, the country still has no special terminal to receive the highly-compressed liquified gas.

LNG is more expensive, thanks to the expensive processes of cooling and liquification. But it has a wide variety of uses, including as engine fuel for ships and cars, and as a raw material in industrial processes. It can even be turned back into gas and pumped into the normal power network.

In terms of supply, LNG offers flexibility that pipelines cannot match. Tankers can be sent anywhere in the world, and easily rerouted. BP’s chief economist Spencer Dale calls LNG an “insurance policy,” which increases energy security by diversifying sources.

There are also strong ecological reasons to make a switch. LNG-powered ships can cut carbon dioxide and nitrous oxide emissions, pumping out up to 80 percent less emissions than diesel oil. The International Maritime Organization has imposed strict new rules on maritime emissions, especially of sulfur: LNG-powered ships could be part of the answer.

Infrastructure boost

Unsurprisingly, several German ports are competing to host the country’s first LNG terminal. Although the ports of Wilhelmshaven and Stade also have LNG ambitions, most industry observers think Brunsbüttel will be first, thanks to its proximity to Hamburg and its position on the Kiel Canal, which links the North Sea to the Baltic.

German LNG Terminal, the company behind the Brunsbüttel proposal, is a consortium bringing together Gasunie, a Dutch gas supplier, Oiltanking GmbH, a German oil and gas transporter, and Vopak, a Dutch tank storage firm. The company was reluctant to speak to Handelsblatt about the project: Industry sources say it is worried about being publicly associated with natural gas sourced from US fracking.

Planned investment in the Brunsbüttel facility is thought to amount to €450 million ($530 million). Norbert Brackmann, the German government coordinator for maritime industry, told Handelsblatt that federal infrastructure funds could offer some start-up support. The Schleswig-Holstein state government has said it is willing to offer financial backing in principle.

However, public support is also regarded as essential for the terminal to be economically viable. The firm, German LNG Terminal, is optimistic. It has already begun the public approval process to build the facility. And if all goes to plan, it says, LNG will be flowing into Germany through Brunsbüttel by 2022.

Klaus Stratmann covers energy policy and politics for Handelsblatt in Berlin. To contact the author: stratmann@handelsblatt.com

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!