Czechia secures key German LNG terminal capacity for energy security

Prague, Nov 23 (CTK) - The Czech Republic has acquired capacity in one of the onshore liquefied natural gas (LNG) terminals under construction in Germany, as semi-state energy group CEZ has signed a 15-year contract with the operator with an option to extend, PM Petr Fiala and CEZ head Daniel Benes told the press today.

Czechia will have two billion cubic meters of gas per year available from 2027 at the Stade terminal near Hamburg. The amount corresponds to more than a quarter of its current domestic consumption.

Currently, the Czech Republic is leasing a part of an LNG terminal in the Netherlands until 2027, where it has about three billion cubic metres of gas per year available.

According to CEZ, the Stade terminal, being built by German company Hanseatic Energy Hub, will allow the import and gasification of LNG. Later, the terminal can be converted to import and process climate-neutral ammonia, which can be used to produce green hydrogen.

The capacity at the Stade terminal is leased to CEZ for 15 years for the time being, with an option to extend it to 25 years in connection with the future use of green hydrogen.

Fiala stressed the importance of the investment in the terminal as a strengthening of the country's energy security. "We have already taken a number of concrete steps, now we are adding another important piece to the mosaic. Together with the purchase of gas storage tanks and gas pipelines, we are thus fundamentally increasing the possibility of transporting and storing natural gas from reliable suppliers," he said.

The Industry and Trade Ministry concluded a similar security agreement with CEZ as the one for the Eemshaven terminal in the Netherlands. "The share in the terminal in Stade near Hamburg has the advantage of being closer than the terminal in the Netherlands, so the gas supplied will flow across fewer borders, which will reduce the fees for its transport to the Czech Republic," Industry and Trade Minister Jozef Sikela said.

The German terminal will be on land, unlike the one in the Netherlands, which is floating. According to CEZ, these terminals have the advantage of higher capacity, faster unloading and gasification.

"Onshore terminals will gradually replace the temporary floating ones, so from the beginning we have sought to obtain long-term capacity in one of the upcoming onshore terminals. Until recently, we had not been involved in the LNG market at all, and over the last year and a half we have gained a lot of experience, which we will now build on," Benes said.

Since CEZ is leasing capacity at Eemshaven until September 2027, the acquisition of capacity in Germany will allow LNG deliveries to continue smoothly thereafter, Benes noted.

Czech gas consumption fell from 9.4 billion cubic metres in 2021 to 7.5 billion cubic metres in 2022. So far this year, consumption has fallen by another 10 percent compared to last year.

In the future, however, gas consumption is expected to grow, which is one of the main reasons for investing in additional capacity, as the state is counting on its use in heating and electricity generation during the planned phaseout of coal. The state's current calculations predict an increase in gas consumption of two to four billion cubic metres per year over the next few years.

The Stade terminal, which will replace the current temporary floating terminal, will also include LNG tanks. The other lessees of the terminal are German companies EnBW and SEFE. The total capacity of the terminal is 13.3 billion cubic metres of gas per year.

According to the government, the capacities currently available for Czechia at Eemshaven have helped significantly reduce the country's dependence on gas supplies from Russia. This year, that dependence has fallen to zero, according to the Industry and Trade Ministry's data.

On the other hand, CEZ recently postponed a plan to secure capacity at an LNG terminal in Poland, as the company did not like the conditions offered.

The long-term lease of LNG terminal capacity in Germany is an important step towards securing Czechia's access to a key energy commodity, according to analysts polled by CTK.

For the Czech energy sector, it means greater certainty about the provision of energy for domestic industry and households, said Capitalinked.com analyst Radim Dohnal.

However, whether the investment was financially advantageous remains unclear. "Unfortunately, the government has not disclosed the financial aspects of securing the new capacity. In my opinion, however, this is crucial information to be able to judge whether securing capacity at the Stade terminal is as much of a success as the government claims," said XTB analyst Jiri Tylecek.

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