Germany’s Uniper to accentuate LNG focus as a part of plans to switch Russian gasoline

Expects larger LNG capability utilization at Gate, Grain

Working to deploy FSRU, safe provides for German terminals

Climate, gasoline storage to play key position this winter: CFO

Germany’s Uniper — previously considered one of Europe’s greatest patrons of Russian gasoline — is growing its deal with LNG because it seems to switch misplaced volumes from Russia, the corporate mentioned Nov. 3.

Uniper was notably onerous hit by the suspension of Russian gasoline flows through the Nord Stream pipeline and has had to purchase substitute gasoline volumes available on the market at a lot larger price to satisfy buyer demand, resulting in important monetary losses.

Uniper CFO Tiina Tuomela, talking on a third-quarter earnings name, mentioned reshaping the corporate’s gasoline midstream enterprise and contributing to German provide safety had been among the many administration’s key near-term goals.

“This consists of initially increasing LNG infrastructure and provide relationships,” Tuomela mentioned, a reference to the deployment of latest German LNG import infrastructure and efforts to safe the required LNG provide.

Tuomela additionally mentioned Germany had constructed gasoline storage shares to a wholesome degree over the summer time, bringing “some consolation” for the present winter. “Nonetheless, it’s all concerning the climate — that may play a key position,” she mentioned.

“In relation to subsequent winter 2023/24, the storages will probably be fairly empty after this winter, so the query is how will we refill the storages with no gasoline anticipated from Russia,” she mentioned.

Immediate European gasoline costs have weakened in latest weeks as a consequence of gentle climate, wholesome storage shares, and demand reductions, however considerations stay over subsequent winter.

Platts, a part of S&P World Commodity Insights, assessed the benchmark Dutch TTF day-ahead worth at Eur61/MWh on Nov. 2 in contrast with a Winter 23 evaluation of Eur131.10/MWh ($127.87/MWh).

LNG imports

Uniper already imports LNG due to its long-term capability bookings on the Gate terminal within the Netherlands and the Grain terminal within the UK.

Additionally it is working to deploy a brand new floating LNG import terminal on the German port of Wilhelmshaven, which is ready to start operations on the flip of the yr, and to safe LNG provides for the terminal.

“A number of the curtailed gasoline volumes from Russia will have to be changed by LNG deliveries,” Uniper mentioned in its Q3 earnings report.

“On account of this, Uniper foresees the next utilization of its present long-term bookings of the Gate and Grain LNG regasification vegetation,” it mentioned.

In March, Uniper mentioned it might enhance its capability rights at Gate by 1 Bcm/yr for 3 years ranging from Oct. 1. It had already dedicated to a capability enhance of 1 Bcm/yr beginning in October 2024.

Each transactions complement the prevailing capability of three Bcm/yr that Uniper holds because the begin of Gate terminal in 2011.

Uniper mentioned Nov. 3 that its expertise at Gate — the place it has elevated booked capability through the years — stood it in good stead for importing extra LNG into Europe.

“This varieties a very good basis to ascertain LNG as an vital a part of the German provide portfolio,” it mentioned.

In addition to Wilhelmshaven, Germany additionally plans a state-backed terminal at Brunsbuttel that’s anticipated to begin up on the flip of the yr.

The 2 floating storage regasification models are amongst 5 state-backed terminals set to be put in in northern Germany together with one other FSRU at Wilhelmshaven, and terminals at Stade and Lubmin.

A sixth privately-owned FSRU can also be to be deployed at Lubmin from December this yr.

Germany has no LNG import infrastructure at current, however efforts to develop plenty of terminals intensified after Russia’s invasion of Ukraine in February and the curtailment of Russian gasoline provides to Germany.

Uniper technique

Uniper has agreed to provide LNG to the 2 state-backed FSRUs at Wilhelmshaven and Brunsbuttel from their startup to make sure full capability utilization.

“Uniper continues to implement its technique, which incorporates making the vitality provide extra diversified and safe,” it mentioned in its Q3 report.

It highlighted the procurement of extra volumes of LNG for Germany “in cooperation with the German authorities.”

“Uniper is effectively positioned for this with its international LNG enterprise and its contractually secured LNG volumes,” it mentioned. In 2021, Uniper traded greater than 360 cargoes worldwide.

In its Q3 report, Uniper additionally mentioned it was working collectively with Japan’s JERA to optimize their LNG portfolios. “Consequently, Uniper will have the ability to provide extra LNG to Germany and JERA to Japan,” it mentioned.

Uniper was additionally impacted by the fireplace on the US Freeport LNG export terminal in June, which led to a shortfall in offtake for Uniper and the necessity to substitute volumes in Q3.

“In our case, this meant that we missed three LNG cargoes. As these had been beforehand hedged, we wanted to purchase the volumes again with important losses,” Tuomela mentioned.