A small port city near Hamburg is the leading choice of Angela Merkel’s government for the first liquefied natural gas terminal in Germany, according to people familiar with the thinking of senior ministers.
The town on the Elbe River, Brunsbuettel, is competing with rival bids from the city of Stade and the North Sea port of Wilhelmshaven for federal aid that’s key to unlocking investment in the terminal. The Economy and Energy Ministry in Berlin is backing the bid of Brunsbuettel partly due to its proximity to Hamburg, said two people familiar with the government’s thinking.
Merkel is under pressure to give concrete support and finance for a terminal that would serve as an alternative to bringing natural gas into Europe by pipeline from Russia. President Donald Trump has criticized Germany for being too reliant on Russian gas and urged the country to buy LNG from the U.S. instead.
Brunsbuettel, Stade and Wilhelmshaven have lobbied hard to win federal backing, which is essential to secure private investment for the facility that is likely to cost hundreds of millions of dollars.
The Economy and Energy Ministry declined to comment.
The government may announce a winner for aid as early as Feb. 12, according to the people, who asked not to be named because the discussions remain confidential. They noted talks that day in Berlin between Economy and Energy Minister Peter Altmaier, U.S. Deputy Secretary of Energy Dan Brouillette and International Energy Agency Executive Director Fatih Birol. Executives from U.S. and German gas companies will also attend that meeting.
Backed by the state government of Schleswig-Holstein, Brunsbuettel started in 2017 to lobby the government over its advantages as a LNG port — a year before Stade put its case. The bids have been overshadowed by delays in gaining approval from Bnetza, the power regulator, to build a pipeline from the LNG terminals to Germany’s gas pipeline grid.
Brunsbuettel’s bid is being led by a joint venture of gas infrastructure company NV Nederlandse Gasunie, Vopak LNG Holding BV and Oiltanking GmbH, bundled together as “German LNG Terminal.” It’s sited at the North Sea end of Germany’s “Ostsee Kanal” channel, giving it shipping access to the Baltic. It’s also close to Germany second-biggest city, Hamburg.
RWE AG and German LNG Terminal GmbH last year brokered a deal to secure a “substantial annual capacity” of potential imports.
Germany needs LNG capacity fast, according to federal lawmakers including Oliver Grundmann from Merkel’s Christian Democrats. He cited the need for shipping to switch from dirtier fuels after 2020, when International Maritime Organization limits on sulfur emissions kick in.
Grundmann is backing the bid from Stade, which is in his constituency. The blueprint to build a LNG terminal in the town’s harbor is led by LNG Stade GmbH, which is counting on financing from the Macquarie Group Ltd. and China Harbour Engineering Co. and would cost as much as 500 million euros ($567 million). The company said a Stade terminal would eventually be able to handle as much as 15 percent of Germany’s gas imports.
Wilhelmshaven, a German Navy port, is backed by Uniper SE. That utility signed a preliminary agreement with Exxon Mobil Corp. last month for a long-term booking of a “substantial” share of regasification capacity at the German utility’s planned floating LNG terminal.
Supplies of pipeline gas to Germany from the rest of Europe are drying up, boosting Russia’s position as the primary source for heating, industry and power plants. Russia accounted for about 45 percent of Germany’s imports in 2017, an increase of almost 4 percentage points from the previous year, according to data from McKinsey & Co.