Germany unveils its first LNG terminal to reduce energy dependence on Russia

It is common knowledge that the Russian invasion of Ukraine altered the dynamics of Europe. Energy matters have been the most effected due to the strong dependence of Russian oil and gas sold by Moscow to many of the countries on the continent. Germany was one of the countries that felt the impact the most, so, in a race against the clock to prepare for winter, it desperately sought out new sellers and, mainly, ways to receive the (liquefied) gas. Ten months after the start of the war, Chancellor Olaf Scholz presented the country's first liquified national gas plant on Saturday.

German media has covered the event as a major story. The arrival of the ship Höegh Esperanza to the port of Wilhelmshaven generated a great deal of hope. This is the first terminal, although temporary, that will allow the country to regasify liquefied natural gas (LNG) that arrives by ship.

"As of today, our power supply is a little more secure and independent. The first LNG terminal was inaugurated in Wilhelmshavenbuilt in record time and also ready for the future of hydrogen. Three more will follow soon," Scholz said after the presentation.

Since Berlin's decision to reduce imports, coupled with cutbacks and Moscow's threats to stop supplies altogether, the need to replace this gas has gone up. However, as a result of Angela Merkel’s energy policy (who tied the heating of half of German households and 55% of the industrial sector's operation to Russian gas), the country was faced with an immense problem, mainly in the area of infrastructure.

During the last decade, Germany built two pipelines (Nord Stream 1 and 2) that run under the Baltic Sea and connect to Russia to receive all energy directly. This multi-million dollar investment was put on hold when the war broke out. Merkel, who hoped to continue business with Vladimir Putin for many years to come, did not bother to think of other ways of receiving the gas. Now, faced with the need to import LNG, the country does not have adequate terminals.

LNG, Germany's way out

The opening of Scholz is very important, as it will allow Germany to receive some LNG directly and lease fewer terminals from neighboring countries such as the Netherlands or Belgium. Of course, this is a temporary and very costly outlet, as the Höegh Esperanza is a 300-meter vessel that is chartered on a daily basis and only covers 6% of the needs, but it contributes to the security of supply. In the coming weeks, three more similar vessels are expected to be inaugurated.

Unlike pipeline gas shipping, which is much more direct and cheaper, LNG requires significant infrastructure to operate, both from the exporter (e.g., the United States, Qatar or Australia) and the importer (in this case, Germany). The exporting country must liquefy and freeze it. In that state, it travels in giant ships to the receiving country, which must thaw and then liquify it. The whole process is extremely costly and requires several terminals such as the one announced this Saturday by the Chancellor.