February 5, 2023

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Germany closes mega deal for US LNG

International29 Dec ’22 at 12:34 PMAuthor of the books: Jorn Lucas and ANP

German energy group RWE has signed a fifteen-year deal to import liquefied natural gas (LNG) from the US. Every year, this equates to 3 billion cubic meters of gas entering the country through the LNG terminal near Hamburg.

“That’s about 30 shiploads per year, three percent of Germany’s total gas needs per year,” says reporter Terk Marseille. There has been a lot of lobbying to do this, which is seen as encouraging the German government. “This is a great victory for Germany and for political Berlin.” According to RWE, the deal will help Germany diversify its energy supply.

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Before the Russian invasion of Ukraine, Europe’s largest economy was largely dependent on natural gas from Russia. RWE has signed an agreement with Sempra Infrastructure to supply LNG from 2027 from the yet-to-be-opened Texan facility.

Russia has been cutting natural gas supplies to the European Union since the war with Ukraine began. EU countries are supporting the Eastern European country by imposing economic sanctions against Russia and cutting off gas supplies is seen as a means of pressure on the Kremlin.

Strong ties with the US

In the end, RWE ended up with the deal, but there were several companies competing to get gas from the US to Germany. Although Germany does business with other countries such as Qatar, the United Arab Emirates and Senegal for LNG supplies, relations with the United States are under pressure, Marseille says. But with this agreement, both countries make it clear that the alliance is strong.

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German industry is delighted with the deal. “You can hear sighs of relief in Munich, Stuttgart and Frankfurt,” says Marseille. Energy-intensive companies are concerned about the dry flow of Russian gas, which won’t change anytime soon. ‘This agreement with the United States is very important for them to control this gas with the period of energy transition.’

Dutch gas

Germany also still buys gas from Groningen in the Netherlands. It is not known whether that demand will decrease. “Now that Germany has started importing LNG freely, the pressure on the Netherlands will ease. But Dutch infrastructure remains vital to the transport of wind energy.

German energy group RWE has signed a fifteen-year deal to import liquefied natural gas (LNG) from the US. (ANP / Vincent Janink)