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A EUR 4.06 billion ($4.24 billion) direct grant by the German government for four gas storage and regasification units (FSRUs) has received state aid rules clearance from the European Commission.
Germany chartered the FSRUs December 2022 and created Deutsche Energy Terminal GmbH (DET) to manage the liquefied natural gas (LNG) import terminals.
“The measure aims to address energy market disruptions caused by Russia’s invasion of Ukraine and the halt of pipeline gas supplies from Russia to Germany”, the Commission said in a statement. “The FSRUs, two of which started operating quickly, provide an additional import route to replace part of the lost Russian gas.
“The FSRUs are a temporary solution until permanent on-shore LNG terminals are completed in Germany to ensure long-term gas supply”.
The state aid covers DET’s losses for the duration of the FSRUs’ charter period. “As they were chartered at the peak of the energy crisis when demand and costs were very high and their limited operating time frame does not allow for full cost recovery, these terminals were expected to operate at a loss from the outset”, the Commission said.
“The total net contribution between 2023 and 2033 is expected to amount to €4.06 billion. In case of higher losses than expected, the total net contribution could amount to €4.96 billion”.
Germany will stop operating two of the four terminals, those in Brunsbüttel and Stade, once their planned onshore LNG terminals become operational, “preventing market overlap”, the Commission said.
“Once the on-shore LNG terminals are active, the FSRUs will be sub-let at market rates, following worldwide calls for interest open to all bidders and locations, until the lease contracts expire”.
Teresa Ribera, executive vice president for clean, just and competitive transition at the Commission, said, “The German measure approved today significantly contributes to ensuring continuity of gas supply to Germany and neighboring countries following the end of Russian pipeline gas imports”.
“The measure contributes to reducing the dependency on Russian fossil fuels and enables the diversification of energy supplies, in line with the REPowerEU Plan”, Ribera added. REPowerEU was launched May 2022, outlining actions toward EU independence from Russian fossil fuels, in the aftermath of Russia’s invasion of Ukraine February 2022.
According to an analysis by economic think tank Bruegel published October 17, 2024, the EU’s gas infrastructure buildout including Germany’s FSRUs and planned LNG terminals can help answer for about 140 terawatt hours of gas that the EU would need to replace after the end of the Russia-Ukraine transit agreement this month.
