Mon. Jan 30th, 2023

Prof. ST Hsieh

Director, US-China Energy Industry Forum

626-376-7460

[email protected]

January 3, 2023

Congratulations for Germany’s achievement and to the US LNG exporter. But,

  1. What is the cost that Germans have to pay for this US cargo of LNG, relative to Russian pipelined gas?
  2. At a cost of €6.5 billion per such a floating terminal, how many terminals will be built in Germany? Germany is the 4th largest economy in the world, so it can afford such a high-cost project, what realistic options are available for other European nations?
  3. The full supply capacity of this terminal is close to 6% of Germany’s annual consumption in 2021, then how much investment will be needed to fully power Germany with LNG? How long will it take to build up all the needed infrastructure?
  4. EU estimating that ending its reliance on Russian fossil fuels will add at least 300 billion euros, equivalent to around $320 billion, in infrastructure costs through 2030. One has to realize that the $320 billon investment does not include any contributions to sustain the war in Ukraine. Further, the war in Ukraine war should be ended before 2030, how much will it cost to rebuild the war damaged Ukraine? Money does not grow trees, who is going to pay for it?
  5. Even if all goes according to the plan, what will be European’s industry outputs from now to 2030? How will European economy be competitive with US, China, and Japan etc.?
  6. Certainly, Europeans and Russians are both losers of this war in Ukraine. Of course, Ukraine will lose the most, more than anyone!

German Facility, Built at Breakneck Speed, Accepts Gas Shipment From U.S.

By WSJ Georgi Kantchev Jan. 3, 2023 8:24 am ET

BERLIN—Germany’s newly constructed liquefied-natural-gas terminal received its first full cargo from the U.S. on Tuesday, as Berlin races to shore up its supply after the end of its decadeslong energy relationship with Russia.

The shipment arrived at the LNG import terminal in the port town of Wilhelmshaven on the North Sea, a facility that was built at a breakneck speed in less than a year to help Germany avert an energy shortage.

The U.S. gas supplier, Venture Global Calcasieu Pass LLC, a subsidiary of Venture Global LNG, is likewise rapidly expanding its facilities to meet Europe’s rising demand. Venture Global LNG last year secured $13.2 billion in financing and gave final approval for a project near New Orleans—the first new U.S. plant to receive a green light in three years.

The tanker, the Maria Energy, was loaded on Dec. 19 in Calcasieu Pass, La., at a facility Venture Global brought online in the middle of last year. It carries around 170,000 cubic meters of LNG, which is enough to supply around 50,000 German households with energy for one year, according to Uniper SE, the operator of the Wilhelmshaven terminal.

“The use of LNG as a reliable energy source is crucial for the security of supply for Germany and Europe,” said Niek den Hollander, Uniper’s chief commercial officer.

Faced with a possible gas shortage and economically ruinous rationing, Germany also extended the usage of its last three nuclear power plants until April and reactivated coal power plants.

Helped by milder weather and reduced demand by consumers and industry—some at the cost of closed factories and insolvencies—Germany was able to fill its gas-storage facilities close to the brim ahead of the winter heating season. But the weather continues to be a major wild card, with a cold snap in early December boosting demand for gas. More recently, warmer-than-average temperatures allowed Europe to refill some of its tanks.

The challenge for Germany, and for Europe more broadly, is how to replace Russian gas this year, given that Moscow still delivered most of its usual amounts for the first half of last year, which helped fill the gas tanks.

Dozens of LNG facilities are slated for construction across the European Union in coming years, with the EU estimating that ending its reliance on Russian fossil fuels will add at least 300 billion euros, equivalent to around $320 billion, in infrastructure costs through 2030.

The terminal in Wilhelmshaven is one of several such facilities being readied in the country to avert an energy shortage. The government had budgeted more than €6.5 billion for such terminals in 2022.

German Chancellor Olaf Scholz in mid-December opened the terminal, which can handle around 5 billion cubic meters of natural gas a year, or close to 6% of Germany’s annual consumption in 2021.

Tuesday’s LNG cargo delivery is part of the commissioning process of the terminal, with commercial operations expected to start in mid-January, Uniper said.

“As strategic partners, we look forward to providing long-term security of energy supply to our allies through the continued delivery of clean and reliable U.S. LNG,” said Mike Sabel, chief executive of Venture Global.

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