Germany ready for winter with 'speedy' new gas terminal tapping global market


Tim Stickings
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Europe’s newest weapon in what it calls an energy war with Russia was built at such speed that one engineer, Folker Kielgast, choked up in tears as he saluted his comrades.

Just 194 days after work began, Germany’s first maritime gas terminal is ready to receive its first shipment.

It opens the door to gas imports from all over the world — a big step in breaking free from Russia.

“We are becoming independent. We will not let ourselves be blackmailed, and we stand by Ukraine without relying on third parties for gas,” said Olaf Lies, a local politician closely involved with the project in Wilhelmshaven.

The pier at Wilhelmshaven is one of two in Germany hurriedly set up to receive liquefied natural gas by ship.

At Wilhelmshaven, it will be converted back into gas and piped into the 511,000km German gas network to help keep the lights on this winter.

The National was on board the motor boat Fair Lady as people behind the project took a celebratory ride to the terminal on Tuesday.

Over seafood and fried eggs, they savoured what Mr Lies called a “new German speed” in a country with a reputation for no-shortcuts bureaucracy.

While environmentalists have a list of objections almost as long as the 350m pier, there is hope that the same can-do attitude will now be applied to clean energy.

“It means realising projects in a space of time that we in Germany could not have imagined in years and decades gone by,” Mr Lies said.

An aerial view of the LNG terminal at Wilhelmshaven. Photo: NPorts/Wolfhard Scheer
An aerial view of the LNG terminal at Wilhelmshaven. Photo: NPorts/Wolfhard Scheer

Shadow of war

Holger Banik, the head of port operator NPorts, said he wished it had not taken Russia invading Ukraine to finally make the terminal happen.

Wilhelmshaven was identified as a possible site as early as the 1970s but the project could never get off the ground.

While other countries built LNG terminals, energy company Uniper shelved the Wilhelmshaven idea in 2020, saying the market conditions were not suitable.

As late as October 2021, German officials wrote a now-infamous report saying yet more Russian gas was the way forward.

Only in February 2022 did Chancellor Olaf Scholz abandon the Russian-owned Nord Stream 2 pipeline and turn towards LNG.

About 30 to 40 engineers worked on the Wilhelmshaven terminal every day from May onwards, building 194 pylons and pouring 3,000 cubic meters of concrete.

“It was a super effort from you all,” said the tearful Mr Kielgast.

Ministers chartered ships to act as floating regasification units, such as the Hoegh Esperanza in Wilhelmshaven, until permanent facilities are built on land.

The first LNG shipment is expected to arrive in Wilhelmshaven in mid-December and ease the strain on Germany’s energy grid.

A second terminal at Brunsbuettel is due to start operating around the same time. Others are still in progress and should come online in 2023.

The US, Australia and Qatar are among the potential LNG suppliers to Germany, which can forward gas to its European neighbours.

Uniper believes the extra gas could help prevent blackouts this winter and stabilise the European energy market.

“We expect the imports to have a positive effect on the German gas market,” Christian Janzen, a technical director at Uniper, told The National on the deck of the Fair Lady.

“We believe it will make a significant contribution to energy security.”

Germany is entering winter with its gas tanks almost 100 per cent full after an unseasonably warm October.

But its problems will be far from over in the spring, with politicians already looking nervously ahead to the winter of 2023/24.

Germany had many months of Russian supplies this year before Moscow turned off the tap, which it is unlikely to enjoy next year.

Direct LNG imports will be able to cover about a third of Germany’s gas needs by next winter, it is hoped.

However, the combined 25 billion cubic metres of annual gas capacity provided by five planned LNG terminals is still below the 55 billion in Nord Stream 1.

With every gas shipment precious, Mr Janzen said security would be high at the Wilhelmshaven terminal.

But he would not say whether security was tightened after the apparent sabotage attacks on Nord Stream 1 and 2.

Politicians and people involved with the LNG project take a boat ride to the terminal in Wilhelmshaven, Germany. Tim Stickings/The National
Politicians and people involved with the LNG project take a boat ride to the terminal in Wilhelmshaven, Germany. Tim Stickings/The National

Climate concerns

Many climate activists are not celebrating. They see LNG as a backward step when Germany is meant to be consigning fossil fuels to history.

“What has Germany achieved this year? Gas, gas, gas,” and extra coal and nuclear power, said Elisabeth Staudt of Environmental Action Germany.

It comes at a time when condemned coal plants are being reactivated and nuclear reactors kept on the grid for longer than planned.

Another complaint is that gas imported from the US is likely to come from fracking, a process many activists dislike.

Then there are concerns for local wildlife, with environmentalists alarmed about water contamination near a national park.

Vice Chancellor Robert Habeck brushed aside fears for local porpoises despite insisting he was the “biggest porpoise fan in the government”.

Those behind the Wilhelmshaven project insist it is not incompatible with Germany’s green goals.

German Economy Minister Robert Habeck was present when construction began at Wilhelmshaven on May 5. Reuters
German Economy Minister Robert Habeck was present when construction began at Wilhelmshaven on May 5. Reuters

The vision of Mr Scholz and others is that LNG terminals should one day be converted into green hydrogen hubs.

On the day politicians showed off the Wilhelmshaven pier, Germany announced €550 million ($572 million) of new funding for hydrogen.

“The example of Wilhelmshaven shows that Germany can be quick and move infrastructure projects forward with great resolve,” said Mr Habeck.

A recent report by a scientific institute cast doubt on whether conversion for hydrogen would work.

Mr Janzen said it would be the middle or the end of the decade by the time green ammonia, used to make hydrogen, arrives in Wilhelmshaven.

Mr Lies conceded that politicians had lessons to learn about how to communicate with concerned voters.

But “we are not taking a step backwards to a fossil fuel era,” he said as the motor boat approached the terminal.

“Let’s take what we’ve achieved — building infrastructure at high speed, showing people in Germany that we can do it — and translate it to other projects that we have, to climate change, to the transformation of industry, to the path out of fossil fuels and into renewable energy.”

Sarfira

Director: Sudha Kongara Prasad

Starring: Akshay Kumar, Radhika Madan, Paresh Rawal 

Rating: 2/5

The Byblos iftar in numbers

29 or 30 days – the number of iftar services held during the holy month

50 staff members required to prepare an iftar

200 to 350 the number of people served iftar nightly

160 litres of the traditional Ramadan drink, jalab, is served in total

500 litres of soup is served during the holy month

200 kilograms of meat is used for various dishes

350 kilograms of onion is used in dishes

5 minutes – the average time that staff have to eat
 

Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

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Water waste

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Horticulturists suggest the best time for watering is before 8am or after 6pm, when water won't be dried up by the sun.

A global report published by the Water Resources Institute in August, ranked the UAE 10th out of 164 nations where water supplies are most stretched.

The Emirates is the world’s third largest per capita water consumer after the US and Canada.

Living in...

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Fund-raising tips for start-ups

Develop an innovative business concept

Have the ability to differentiate yourself from competitors

Put in place a business continuity plan after Covid-19

Prepare for the worst-case scenario (further lockdowns, long wait for a vaccine, etc.) 

Have enough cash to stay afloat for the next 12 to 18 months

Be creative and innovative to reduce expenses

Be prepared to use Covid-19 as an opportunity for your business

* Tips from Jassim Al Marzooqi and Walid Hanna

Ways to control drones

Countries have been coming up with ways to restrict and monitor the use of non-commercial drones to keep them from trespassing on controlled areas such as airports.

"Drones vary in size and some can be as big as a small city car - so imagine the impact of one hitting an airplane. It's a huge risk, especially when commercial airliners are not designed to make or take sudden evasive manoeuvres like drones can" says Saj Ahmed, chief analyst at London-based StrategicAero Research.

New measures have now been taken to monitor drone activity, Geo-fencing technology is one.

It's a method designed to prevent drones from drifting into banned areas. The technology uses GPS location signals to stop its machines flying close to airports and other restricted zones.

The European commission has recently announced a blueprint to make drone use in low-level airspace safe, secure and environmentally friendly. This process is called “U-Space” – it covers altitudes of up to 150 metres. It is also noteworthy that that UK Civil Aviation Authority recommends drones to be flown at no higher than 400ft. “U-Space” technology will be governed by a system similar to air traffic control management, which will be automated using tools like geo-fencing.

The UAE has drawn serious measures to ensure users register their devices under strict new laws. Authorities have urged that users must obtain approval in advance before flying the drones, non registered drone use in Dubai will result in a fine of up to twenty thousand dirhams under a new resolution approved by Sheikh Hamdan bin Mohammed, Crown Prince of Dubai.

Mr Ahmad suggest that "Hefty fines running into hundreds of thousands of dollars need to compensate for the cost of airport disruption and flight diversions to lengthy jail spells, confiscation of travel rights and use of drones for a lengthy period" must be enforced in order to reduce airport intrusion.

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Updated: November 16, 2022, 1:57 PM