May 6, 2019 / 9:19 AM / 2 months ago

Axpo, German LNG Terminal project group seek capacity deal

FRANKFURT, May 6 (Reuters) - Swiss utility Axpo and German LNG Terminal GmbH on Monday said they signed a heads of agreement for a long-term capacity contract for a yet to be built liquefied natural gas (LNG) landing terminal at Brunsbuettel in northern Germany.

The move comes amid efforts to diversify Germany's sources of gas imports, with three projects, including Brunsbuettel, competing to take gas from specialised tankers and distribute them in a lucrative market so far served mostly by pipelines.

"This is another important step towards taking the investment decision (for Brunsbuettel)," Axpe and German LNG Terminal GmbH said in a statement.

They did not disclose financial details and the length of a possible contract or cargo sizes.

Axpo said its involvement reflected the desire to expand on nine years of LNG market activity and the shutdown of numerous coal-fired power plants in the medium term.

Germany needs to lower its carbon footprint so supports more gas usage for power, heating and industry for an interim time until a greater reliance on renewables can be achieved.

Brunsbuettel, also supported by Axpo peer RWE, is in the running for a building permit, alongside an LNG project at Wilhelmshaven, supported by Uniper, with a third terminal plan being pursued at chemical firm Dow's Stade site.

Terminals typically have independent operators while gas shippers, mostly from the utility sector, bring together origin suppliers, local distributors and customers.

German LNG Terminal said it expected an investment decision for Brunsbuettel at the end of 2019.

Germany's government in March approved a plan that will likely spur investment decisions for LNG terminals, recognising growing import requirements and readiness of suppliers like Qatar and the United States to get into the market. (Reporting by Vera Eckert, editing by Emelia Sithole-Matarise)

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