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Every crisis has its winners. Maria Angelicoussis is one of them. The Greek owns one of the world’s largest private shipping companies, the Angelicoussis Group in Athens. At the end of 2021, when gas was still flowing steadily from Russia to Europe, she was on stage at a conference for shipowners and predicted a significant increase in demand for liquefied natural gas (LNG) in the coming years. Your company has therefore ordered another four tankers for the transport of LNG. At that time she already had 45 such special ships in her fleet.

Greek shipowners recognized the trend towards LNG early on. Unlike the Germans, who have not yet expanded their fleet with a single tanker for LNG transport. It is another example of the failure of German energy policy. For decades, the Federal Republic had committed to Russian gas and overslept entering the LNG market. Everything is about to change in a very short time. A terminal for the import of liquefied gas on the German coast will go into operation in Wilhelmshaven next weekend.

Finally. Only: what should actually land there? So far, no long-term supply contracts from German energy companies are known. Most of the gas goes via Germany to Asia, loaded on tankers that are fully booked for the coming years. Germany is a newcomer to the liquefied gas competition and is at the end of the line for new supplier contracts. The German economy therefore has no choice but to prepare for permanently uncertain times.

Extremely dynamic and strongly fluctuating

A look at the past makes it clear what the LNG world that Germany is dealing with looks like. When people still believed in an infinite Russian gas supply via the Nord Stream 1 pipeline. Such a pipeline has many good points: it ensures a constant supply of gas in one direction and to a certain point. Because the investment costs are high, importing and exporting countries usually also commit themselves to purchasing gas permanently – Europe has only known since this year that such obligations can also be broken. However, in previous years, pipeline gas sourcing has usually meant greater stability and consistent prices. The liquefied natural gas market is the opposite, which is “extremely dynamic, prices fluctuate widely,” says analyst Tobias Federico of the consultancy Energy Brainpool.

Buying LNG can be thought of as a bit like buying wet soap – elusive to grasp and even trickier to hold. Unlike transport via an ePipeline, the destination of an LNG delivery can suddenly change. It is common for ships to leave the exporting countries without a destination. The route changes depending on which port has the highest price. “The possibility that a ship loaded with LNG can dock in both Europe and Asia means that market prices are closely linked to developments in other countries,” says analyst Federico. When it is cold in Japan, demand there increases – and prices also rise in Europe.

“We used to groan in Germany when the price of natural gas fell from 25 euros to 15 euros per megawatt hour,” says Federico. Other countries have long been accustomed to worse. Japan, for example, has always relied on LNG due to its geographical location. There, the gas price sometimes jumps to 40, sometimes to 80 euros per megawatt hour and that is “completely normal”.

Even ships whose cargo was previously destined for a country still change direction on the high seas. This is a breach of contract and may result in fines. But if there’s enough money elsewhere, it doesn’t matter. Particularly financially weak countries such as Bangladesh, Pakistan and Myanmar have been affected by spontaneous course changes, says the general director of the Energy Traders Association Germany, Barbara Lempp. EU countries in particular have lured many tankers to their ports since the start of the war in Ukraine.

Promotional tour unsuccessful

Germany was also willing to pay a lot of money. The federal government had no other choice, as it did not yet have long-term supply contracts. The advertising tours of Chancellor Scholz and Federal Minister of Economic Affairs Robert Habeck in export countries such as Qatar or Canada could not change that.

Only the American company Conoco Philipps managed to sign a contract for the supply of LNG with Qatar. From 2026, liquefied natural gas must be supplied to Brunsbüttel for a period of 15 years. German companies such as Uniper currently buy LNG mainly on the short-term spot market. Because there are no own import terminals, these quantities of systems end up in Rotterdam in the Netherlands, in Zeebrugge in Belgium and in Dunkirk in France.

The LNG purchased on the spot market could also be delivered to the German terminals, says Lempp. She does advocate long-term contracts with fixed quantities and prices to guarantee security of supply. “This is especially important for industry, as they need to calculate their energy costs.” Lempp fears that the German economy could falter considerably in the coming years if the country is solely dependent on the spot market.

However, the German energy companies do not seem particularly reliable at the moment. Uniper and Sefe, formerly known as Gazprom Germania, were on the verge of bankruptcy this year and have now been nationalized. Only RWE remains of the local energy companies, which would also have the size to conclude contracts of such size. “This is of course a disadvantage for the negotiations and could be a reason why we only have one contract at the moment,” says Federico.

After all, who wants to do business with companies whose future is completely open. The energy companies themselves are very interested in contracts with fixed prices and quantities, otherwise they would be totally exposed to “erratic price fluctuations” and get into “major financial difficulties” if they had to comply with the contracts with utilities, Lempp emphasizes.

But will countries like Qatar want to supply Europe at all when national economies no longer use fossil fuels in about 20 years, ie have to be decarbonised, and so there is no longer a need for LNG? In the case of long-term supply contracts, the customer also undertakes to purchase a fixed quantity of gas. That is difficult to reconcile with the climate goals.

Tanker booked long term

Germany will also have to take a backseat in the future when it comes to transport capacities. Most tankers are booked long term. You go to India, South Korea or China, it’s not easy to solve. Given the high demand from Europe, shipping costs have also been rising for some time. According to brokerage firm Clarksons Platou, the freight cost of chartering an LNG tanker has risen from $80,000 to $120,000 per day.

German shipowners play no role in the booming market. “In the German merchant fleet, there are no gas tankers that can carry LNG over long distances,” recently admitted the managing director of the Association of German Shipowners, Martin Kröger. The big players are based in Norway or Greece, such as the Angelicoussis Group. They have invested heavily in LNG tankers for about five years and now control a fifth of the world’s capacity.

So when it comes down to it, Germany has no fleet to fall back on. And no shipyard that builds such ships either. These, in turn, are in South Korea, Russia and China – not necessarily countries that have an interest in Europe being properly fueled in the future. Although an LNG tanker cannot be built that quickly, it should at least make a difference in exports in the near future. The US and Qatar want to expand their gas production, so the German energy companies must also be given a chance. Ultimately, the energy supply is a money issue. Whoever bids the most gets more gas. And that the federal government has proven this year that it is willing to raise any amount imaginable to ensure supplies.

This article was first published on Zeit Online. Watson may have changed the headings and subheadings. Here’s the original.