German LNG Terminal Operator Deutsche ReGas Terminates FSRU Charter Agreement

German LNG terminal operator Deutsche ReGas has recently announced the termination of a charter agreement for a full-size Floating Storage and Regasification Unit (FSRU) that it had brought in last year. This decision comes at a time when Germany was actively working to increase its gas import capacity to replace Russian gas volumes. The company cited financial losses and placed blame on Deutsche Energy Terminals (DET), a state-owned entity responsible for organizing LNG imports and ensuring energy supply security.

The terminated charter agreement pertains to the Energos Power, a 174,000 cubic meter FSRU that commenced operations at the port of Mukran in February 2024. The Energos Power is the larger of the two FSRUs in the Deutsche Ostsee LNG import complex at Mukran, with a combined receiving capacity exceeding 13 billion cubic meters per year. Notably, this terminal is the only privately-financed FSRU facility in Germany.

Deutsche ReGas expressed concerns about DET’s pricing strategy, alleging that the state entity has been auctioning import terminal services below a government-approved minimum cost-covering level. This practice has created market distortions, disadvantaging ReGas’ private operation. Ingo Wagner, managing partner of Deutsche Re-Gas, emphasized the impact of DET’s pricing policy on the termination of the sub-charter contract and stressed ongoing dialogue with the federal government to address the situation.

Regarding utilization rates, ReGas highlighted unequal competition from DET since December, attributing it to state subsidies enabling DET to offer services below cost. In contrast, DET defended its compliance with regulations and successful marketing of import services, citing higher utilization rates compared to ReGas in 2024. Dr. Peter Röttgen, Managing Director of DET, emphasized the positive reception of the import services in recent auctions and the necessity to replenish declining storage levels.

Germany’s LNG terminals play a crucial role in the country’s strategy to reduce dependency on Russian gas. However, amidst discussions of potentially restarting pipeline gas imports from Russia in the event of a peace deal in Ukraine, the future of German FSRUs remains uncertain. Political parties like Alternative für Deutschland (AfD) have indicated support for reactivating the Nord Stream 2 pipeline, posing challenges to the competitiveness of FSRUs in the market.