Germany aims for fourth FSRU in race to cut off Russian gas

A view shows valves near a drilling rig at a gas processing facility, operated by Gazprom company, at Bovanenkovo gas field on the Arctic Yamal peninsula, Russia May 21, 2019. REUTERS/Maxim Shemetov

BERLIN, May 1 (Reuters) - Germany wants to build four instead of three floating storage and regasification units (FSRUs) as it strives to replace Russian gas with liquefied natural gas (LNG) that can be sourced from many countries, the economy ministry said on Sunday.

Chancellor Olaf Scholz's government is seeking alternatives to gas pipeline deliveries from Russia with the goal of reducing imports to zero in two years.

President Vladimir Putin's decision to invade Ukraine shattered a belief held broadly over decades in Germany that economic cooperation with Russia would secure peace in Europe.

Scholz has rejected calls to cut Russian gas imports immediately despite criticism that they are helping to finance Russia's war in Ukraine, saying such a drastic measure would hurt the European Union more that it would hurt Russia.

The economy ministry said in a progress report that work on the first FSRU in Wilhelmshaven will start shortly and should be ready to regassify supercooled LNG this year.

The second floating facility would be built in Brunsbuettel, northwest of Hamburg, and should be operational next year.

Utilities RWE (RWEG.DE) and Uniper (UN01.DE) have secured the contracts to build the FSRUs for which the government has earmarked 2.94 billion euros ($3.10 billion).

The ministry said the northern cities of Stade, Rostock, and Hamburg, as well as Eemshaven in the Netherlands were possible locations for the other two FSRUs.

Moscow's invasion of Ukraine has contributed to a surge in energy prices and raised fears of rationing and blackouts.

The mayor of Hamburg told Welt am Sonntag newspaper that the city was planning a provisional LNG terminal to become operational by year-end with a capacity of 8 billion cubic metres a year.

Scholz has dismissed economists who have said Germany could cope with a Russian gas stoppage.

The Universities of Bonn and Cologne said in a joint study that German output would decline by between 0.5% and 3% in the short term, compared with 4.5% in 2020 because of the pandemic, which makes the consequences of a stoppage "substantial, but manageable".

($1 = 0.9488 euros)

Reporting by Andreas Rinke; Writing by Joseph Nasr; Editing by Hugh Lawson and Barbara Lewis

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