Regas announces agreement for LNG ship construction - Federal government faces significant backlash
Deutsche Regas, the sole private operator of an LNG terminal in Germany, located near Rügen, is feeling the squeeze. The company, which operates two ships, the "Neptun" and the "Energos Power," has called out Deutsche Energy Terminal (DET), a state-owned entity, for engaging in shady business practices. Ingo Wagner, Deutsche Regas CEO, lamented the situation, blaming DET's pricing policies for forcing him to terminate the charter contract with the Federal Ministry of Economics for the "Energos Power."
Wagner accuses DET of distorting the market with non-competitive pricing for its import capacities. Deutsche Regas argues that this unfair competition results in significant market imbalance in Germany. The company, however, stresses that it's still in discussions with the federal government regarding the "Energos Power's" future. The "Neptun," on the other hand, will carry on with its usual regasification duties, supplying LNG to the network.
The "Energos Power," chartered from the federal government, has become a point of contention. Deutsche Regas claims that this ship's reduced operation goes against the interests of consumers. The facility, which started operations in September, has been controversial, with the municipality of Binz raising concerns over potential damage to tourism, nature, and the climate.
However, the Federal Ministry of Economics defends the terminal's importance, emphasizing its role in securing gas supply, especially in eastern Germany and Central Europe. Wagner echoes this sentiment, mentioning that solutions can be found for any potential supply shortage.
The situation is further complicated by operational costs and low terminal utilization. Deutsche Regas faces higher variable regasification costs compared to other regions, leading to higher fuel gas losses. Despite these challenges, only about 8% of Germany's gas imports last year came via its shipping terminals. Neighboring countries' increased LNG imports have added to the mix, leading some environmental groups to call for a halt to the expansion of such infrastructure.
Deutsche Regas, facing uncertain market dynamics and higher costs, finds itself at a crossroads. The company's decision to reduce capacities and its accusations against DET are a reflection of these challenges.
The economic impact of the situation is significant for Deutsche Regas, as the company struggles with higher regasification costs and lower terminal utilization. This impact on the economy is further exacerbated by the reduced operation of the "Energos Power" and the increased competition from neighboring countries' LNG imports.
