February 22, 2024 [Montel News]- (Montel) Germany should reconsider plans to expand its LNG terminal network, given adequate supply levels the last two years, according to the DIW think tank.
“Based on the low demand for existing terminals and the general supply situation, a political fix would be advisable to the chosen course, so that construction plans could be coherently matched to actual circumstances,” read the Monday report from DIW.
Germany began installing the LNG terminals in response to dwindling gas flows from Russia after it invaded Ukraine in February 2022. Three terminals are currently operational.
But DIW argued that the capacity appears to be unnecessary, given that 2023 consumption was down, both when compared to 2022 levels and to the 2018-2021 average. Furthermore, it noted that forward prices indicate little likelihood of a coming spike in prices.
For example, the price for the TTF 2025 gas contract stood at EUR 28.25/MWh on Monday, consistent with levels seen in 2021 and well down from a high of EUR 312.50/MWh seen in August 2022.
Furthermore, German gas stores have remained high the last two years, with expectations the country will go into the 2024/25 winter season with its tanks once again near 100%.
Noting that Germany had only used about 50% of its stores during the current winter, DIW argued that any future cold waves could be handled with a combination of running down stores and importing more gas via the three existing terminals.
On Monday, German gas storage was at 71.54% full, according to Gas Infrastructure Europe.
DIW cited the 2022 declaration of a gas emergency for accelerating the terminals’ construction but pointed out that fears of gas shortages never materialised.
At the same time, the emergency declaration was being used to sideline environmental inspections and pursue more terminals.
Questions about the need for more LNG terminals have prompted protests and legal action in Germany, with some of the sharpest criticism being directed at a terminal for the Baltic Sea island of Ruegen.
Among the operational terminals, Gascade Gastransport operates one in Lubmin (5 bcm/year) on the Baltic Sea, while Deutsche Energy Terminal has North Sea facilities in Bruensbuettel (3.5 bcm/year) and Wilhelmshaven (at least 5 bcm/year).
Deutsche Energy Terminal recently said an additional Wilhelmshaven facility (4.5bcm/year) and one in Stade (7.5bcm/year) are expected online in the coming months. Five other terminals are in planning, which would add at least 41bcm/year, according to DIW.
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