Reminder of German vulnerability to single suppliers: Kehler
US supply ‘essential’ to freeing EU from Russian dependence
EnBW, SEFE contracted to take LNG from Venture Global’s CP2
German gas industry group Zukunft Gas has slammed the White House’s decision to “pause” new US LNG export permits, saying the move would have a particularly negative effect on the market.
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Germany has turned to LNG — with three floating import terminals already operational and three more set to be deployed in the coming months — to replace lost Russian pipeline gas.
The US has been the dominant LNG supplier to Germany since the first terminal came online at the end of 2022, with US LNG deliveries totaling 4.1 million mt last year, or 82% of total imports, S&P Global Commodity Insights data showed.
German buyers — namely EnBW and state-owned SEFE — have also contracted future LNG to be supplied from Venture Global’s planned CP2 facility, which is one of the projects affected by the White House decision.
In comments to S&P Global Jan. 30, Zukunft Gas chair and CEO Timm Kehler said US supplies were essential to freeing the EU from the grip of Russian energy dependence.
“US LNG exporters have made significant efforts to replace Russian gas supplies in the last two years. We are therefore extremely critical of the announced stop to the approval of new LNG terminals,” Kehler said.
He added that the uncertainties triggered by the move would have a particularly negative impact on the market.
“They are driving the energy price gap between the US and Europe further apart and worsening the location conditions here,” Kehler said.
US gas prices have long been at a significant discount to prices in Europe given the US shale gas boom and Europe’s continued import dependence.
Platts, part of S&P Global Commodity Insights, assessed the US Henry Hub price on Jan. 29 at $2.49/MMBtu compared with a TTF front-month assessment of $8.97/MMBtu.
Dominant supplier
Kehler also said it should be a clear reminder for Germany to promote the diversification of gas purchases by developing additional strategic suppliers.
“We should have learned by now: If a single exporter is too dominant, it makes Germany’s energy supply vulnerable,” he said.
Germany previously bought the majority of its gas from Russia via the Nord Stream pipeline but can also import pipeline gas from Norway and is well interconnected with its neighbors.
US LNG had been considered a safe bet for European importers looking to lock in future supply.
In June 2022, EnBW signed a deal with Venture Global to take a total of 1.5 million mt/year of LNG from the CP2 and Plaquemines projects and then in October 2022 increased the offtake volume to 2 million mt/year.
At the time, EnBW chief operating officer Georg Stamatelopoulos said the company was supporting the German government by increasing further access to LNG supplies.
“For this reason, we have stepped up our procurement volumes from Venture Global,” Stamatelopoulos said.
The company declined to comment Jan. 29 on the White House decision.
The EnBW deals were followed by a 20-year offtake deal in June 2023 under which Germany’s state-owned SEFE agreed to buy 2.25 million mt/year from CP2.
At the time, SEFE CEO Egbert Laege said that joining forces with Venture Global would help SEFE make “another important step” to securing energy for German and European customers.
“In delivering a substantial amount of the contracted capacity of CP2 LNG to European customers, we contribute to the further diversification and sustainability of the European energy supply,” Laege said.
SEFE could not be reached for comment on the White House move.
