Germany wants to secure the delivery of future LNG supply contracts for its floating storage and regasification units (FSRUs) with a contractual delivery obligation to guarantee security of supply for at least 50% of the capacity offered in a series of auctions starting next month.
Many liquified natural gas supply contracts do not have a destination restriction clause, allowing traders the option to sell to the most competitively priced market anywhere in the world. Germany is keen to secure at least 50% of its supply to ensure it will have enough gas supply, especially during the cold winter months.
State-owned Deutsche Energy Terminal GmbH (DET) is responsible for marketing the regasification capacities of LNG facilities.
“In terms of establishing security of supply, DET offers not only a flexible standard slot product but also slots with an obligation to deliver, amounting to 50% of the total capacity,” said DET spokesperson Dirk Lindgens.
Sellers may be reluctant to be tied to a specific destination requirement, but Lindgren told NGI that DET would “gather the reactions and experiences from the first auction rounds to prepare for DET’s future capacity marketing.”
There will be separate auctions for open slots, with and without penalties for non-delivery, Lindgens explained.
“Slots with an obligation to deliver are equipped with an incentive to physically deliver natural gas,” he said. “This is done via a small additional fee/penalty for non-delivery amounting to 30% of the terminal charge. This applies initially to the two auction rounds in October.”
DET will hold auctions for regasification capacities including storage and send-out for the first time in two digital auction rounds on Oct. 16 and Oct. 23.
Utilization rights for the first short-term capacities in 2024 will be offered at the Brunsbüttel FSRU, and at one of the two Wilhelmshaven FSRUs. Further short-term capacities at the Stade and the second Wilhelmshaven FSRU will be offered in December 2023. Long-term capacity auctions with a term of more than one year are planned for April 2024.
Germany is the largest gas consumer in Europe. It consumed over 90 billion cubic meters in 2021, or about 3.2 Tcf. Previously, the country was the largest importer of Russian gas, which once met over 50% of the country’s supply requirements.
Until last year, the country had no LNG import capacity, but the government quickly invested in new infrastructure to ensure there is enough gas for cold winters with plans for 10 LNG import facilities.
Three FSRUs are operating at Wilhelmshaven, Brunsbuettel and Lubmin. Wilhelmshaven, Mukran and Stade are due to add more ships for the 2023-2024 winter season. Tree Energy Solutions will operate a second FSRU in Wilhelmshaven later this year. Brunsbettel and Stade are planned to have onshore LNG import terminals for 2026-2027.
