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Home » Germany Embraces LNG as It Weans Itself Off Russian Gas

Germany Embraces LNG as It Weans Itself Off Russian Gas

June 11, 20256 Mins Read Business
Germany Embraces LNG as It Weans Itself Off Russian Gas
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When Russia invaded Ukraine in 2022, Germany realized that its dependency on natural gas piped from Russia had endangered its energy security. It had no ports to bring in alternative energy sources needed to keep its factories running and homes warm. Three years on, it now has four.

The most recent began operating in late May when a tanker called the Energy Endurance pulled in close to shore at the harbor town Wilhelmshaven and began unloading its cargo: liquefied natural gas from the Gulf Coast of the United States.

Watching from a dike, where lambs and their mothers grazed on spring grass, was Marco Alverà, chief executive of TES, a green energy company in the Netherlands that helped construct the terminal, estimated to have cost 400 million euros, at the request of the German government, which now operates it.

“This is the icebreaker,” Mr. Alverà said.

Mr. Alverà and his colleagues have been eyeing Wilhelmshaven for years and initially planned to focus on importing a cleaner form of fuel made with renewable hydrogen to help the country meet its target of reaching climate neutrality by 2045.

But after Russia shut off much of the gas it had piped into Western Europe, Germany realized that even as it was building more wind turbines and solar farms, it also needed more sources of natural gas, which makes up about 20 percent of its energy needs.

The new terminal in Wilhelmshaven is one of many similar efforts across Europe, to set up facilities for liquefied natural gas to lessen Russia’s leverage over the region. The appeal of L.N.G. is that it can be brought from any country — the United States, Qatar, Australia — that have the plants needed to chill gas to liquid form so it can be carried on special ships.

Since the summer of 2022, Europe has increased its capacity to receive L.N.G. by about 30 percent a year, or 60 million metric tons, said Laura Page, an analyst at Kpler, a research firm. “Much of this increase has been in Germany,” Ms. Page said.

L.N.G. made up about 40 percent of Europe’s gas supplies in 2024, nearly double from 2020. Close to half of the imports came from the United States.

Europe’s overall consumption of natural gas has been falling, but L.N.G. fills many energy needs and can be purchased from diverse sources, which means that reliance on it could increase in the coming years, especially if Brussels delivers on commitments to further reduce consumption of Russian gas, which still makes up nearly 20 percent of the bloc’s pipeline and L.N.G. imports in 2024.

“L.N.G. from non-Russian sources is expected to play an increasingly important role as a flexible and geographically diversified supply source,” said a recent study by the Agency for the Cooperation of Energy Regulators, a European energy agency.

TES, the Dutch company, saw an opportunity to bolster energy security, and it agreed to help the German government build an L.N.G. terminal. Like most of the other recent additions, this one is centered around a leased, floating vessel called the Excelsior that warms up the frigid liquid to a gaseous state. Pipes from that terminal enter the national grid on a 360-acre property that the company wants to develop.

In Mr. Alverà’s plans, the existing terminal will eventually give way to a permanent, multibillion-euro energy complex connected to a €600 million jetty with docking space for six ships.

This hub, which Mr. Alverà hopes to gradually sell off to investors, would be capable of handling several times as much L.N.G. as the floating vessel and, over time, would process the gas more cheaply.

Large shipments of L.N.G. into Wilhelmshaven from the United States also have the potential to add up to billions of dollars in revenue — and help bridge the trade gap between the European Union and President Trump, who has pushed for Europe to buy more American energy products.

“If Europe is serious about doing a trade deal with Trump on more L.N.G.,” Wilhelmshaven, which has one of Germany’s best harbors, is the only place in Europe that can be significantly expanded, said Mr. Alverà, who, as the former chief executive of Snam, a large gas company in Italy, has experience in setting up L.N.G. terminals in that country.

Mr. Alverà will probably be required to equip the hub to eventually handle cleaner fuels like hydrogen, but the fuels’ arrival will be later than anticipated because they are not yet available in commercial quantities and Germany’s new government under Chancellor Friedrich Merz appears to be taking a more pragmatic approach to energy supply.

The incoming energy minister, Katherina Reiche, a former chief executive of Westenergie, a regional utility owned by the Germany energy company E.On, has called for building at least 20 gigawatts of gas-fired electric power generation plants — enough to feed the equivalent of 60 million homes — to ensure the lights stay on when there is insufficient breeze or sun to generate power through the huge number of wind and solar energy farms that Germany has built.

“We have to recognize that electricity from renewable sources alone will not achieve a low-cost electricity supply, especially not for energy-intensive companies,” Ms. Reiche told an economic meeting last month. “We need new gas-fired power plants.”

Certainly, the war in Ukraine has changed the way Germany and the rest of Europe look at energy. As a result, Wilhelmshaven, which was something of a backwater despite being the country’s only deepwater port, hosting a naval base and a container port, now looms large in the plans of energy developers.

“What makes it different is that you are in the gateway to a very material market — namely Germany,” said Julian Metherell, a former senior Goldman Sachs banker who is a board member at TES.

When war broke out in Ukraine, Uniper, a German utility that was taken over by the government in 2022, quickly activated long shelved plans to set up a natural gas terminal in Wilhelmshaven.

Carsten Poppinga, chief commercial officer at Uniper, said in an email that L.N.G. terminals were “resilience factors” that served a number of purposes including strengthening “independence from geopolitical risks.”

Two other facilities have also sprung up at Brunsbuttel and Stade, both about 80 miles east of Wilhelmshaven, but having two terminals in Wilhelmshaven has given a boost to a coastal area that had long played second fiddle to Hamburg, Germany’s largest port, officials say.

With them have come some 1,600 new jobs, making it one of the fastest growing regions in the state of Lower Saxony, with the hope for continued growth.

“L.N.G. terminals with L.N.G. ships here was the best marketing campaign for Wilhelmshaven,” said Holger Banik, chief executive of Niedersachsen Ports, which runs the region’s harbors.

Alvera Germany Hydrogen L.N.G. Marco Natural Gas Politics and Government Ports Wilhelmshaven (Germany)
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