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A New Twist In Europe’s Ongoing Gas Drama

Germany energy plants

More news has broken about Germany’s natural gas plans that could help provide markets for U.S. liquefied natural gas (LNG), but could also cause problems for the nearly completed Nord Stream 2 gas pipeline. The first development came on Tuesday when German Economy Minister Peter Altmaier said during a meeting with German and American energy officials and industry lobbyists that he was optimistic that Germany would build two LNG terminals in the foreseeable future, according to a Reuters report.

He added that Germany was weighing up the extent of state subsidies and regulations before private investors build the terminals needed for LNG imports. Currently, there are three possible sites for new LNG terminals in the country, including Brunsbuettel, Stade and Wilhelmshaven. ”All three projects are (being) carefully considered and examined,” Altmaier said. “I am quite optimistic that at least two of the terminals will be realized within a very foreseeable period of time.”

Denying geopolitical associations

Altmaier added that the question of LNG was not related to the Nord Stream 2 gas pipeline project. Nord Stream 2 is a 759 mile (1,222 km) natural gas pipeline running on the bed of the Baltic Sea from Russian gas fields to Germany, bypassing existing land routes over Ukraine, Poland and Belarus. It will double the existing Nord Stream pipeline’s current annual capacity of 55 bcm. It is arguably one of the most geopolitically charged energy projects ever proposed since it increases Russia’s gas monopoly in Europe at a time when several EU states are trying to move away from over-reliance on Russia’s gas supply. Related: OPEC’s Next Big Crisis

Altmaier's comments that Germany’s LNG development is not related to the controversial Nord Stream 2 pipeline comes less than a year after President Trump publicly chided Germany over the country’s support of the Russian backed Nord Stream 2 pipeline, alleging that the U.S. was helping provide security for Germany, while the country was being exposed to greater reliance on Russian piped gas.

Over the next several months, many in Europe accused Trump of using European security concerns to promulgate American sourced LNG. Yet, the Germans were the first to blink in the geopolitical showdown when they stated that they were indeed interested in putting in place needed LNG infrastructure and signing deals with American-based LNG producers.

In remarks at the same meeting on Tuesday, Almaier stressed the decades-old U.S.-German alliance. “I have always advocated a close friendship between Germany and the US, and I believe this is in both of our national security interests,” he said. LNG “one important point of cooperation” between the countries.

U.S. deputy energy secretary Dan Brouillette said at the meeting the U.S. was “prepared to be a transparent, competitive and reliable supplier of LNG to Europe.” The U.S. is “just getting started” as an LNG exporter, he added. “Energy occupies the nexus between national security and economic prosperity,” said Brouillette. “Access to abundant, affordable, reliable, and secure supplies of energy is a fundamental national security concern for every country.” Related: Hedge Funds Unsure Where Oil Prices Are Going

Yet, both officials said there was no deal stipulating that Germany must buy LNG from the U.S. in exchange for a softer American stance on Nord Stream 2. Two weeks ago, German news agency DW reported, citing one of the project’s engineers, that Nord Stream 2 should be operational by November. Klaus Haussmann, an engineer at Nord Stream 2's future landfall site at Lubmin on Germany's Baltic Sea coast, told German public radio station Deutschlandfunk that the "raw" laying of the pipeline would be finished by the middle of 2019, according to the DW report. "Then comes the entire installation of the electrical equipment, security chains. And, then it's planned on the large scale that we get the first conduit filled with gas in November, from Russia," Haussmann said.

New EU gas pipeline import rules

On Tuesday evening, the second development broke that will also impact Germany’s and the EU’s gas import ambitions. An EU draft law was passed, calling for all gas import pipelines to meet EU energy market rules by not being directly owned by gas suppliers, applying non-discriminatory tariffs and transparent reporting and allowing at least 10 percent of capacity to be made available to third parties.

EU Commissioner Arias Canete, responsible for energy, said that Europe was closing a loophole in its laws as its dependency on natural gas imports increases. “The new rules ensure that EU law will be applied to pipelines bringing gas to Europe and that everyone interested in selling gas to Europe must respect European energy law,” he said in a statement.


The provisions would not stop the Gazprom-led Nord Stream 2 pipeline, but it does cast doubt over its operating structure going forward, even as the project nears completion. The deal reached by representatives of the European Commission and parliament and the 28 EU member states should lead to a new law in the coming months, a Reuters report said.

By Tim Daiss for Oilprice.com

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  • Mamdouh Salameh on February 14 2019 said:
    You delude yourself by claiming that Germany blinked first when in fact Angela Merkel the German Chancellor defied threats of sanctions against her country by President Trump and went ahead with building her share of the Nord Stream 2 at the landfall site at Lubmin on Germany's Baltic Sea coast. Moreover, the project will be finished one month ahead of schedule on November 2019 according to German engineers working on the project.

    Furthermore, there is no connection whatsoever between Nord Stream 2 and Germany’s plans to build LNG infrastructure. Germany has always planned to build at least two LNG terminals as part of its energy diversification and not as a concession to President Trump. Germany needs more gas supplies since it is on the way to phasing out coal-fired generation by 2038 and also nuclear electricity by 2022.

    Still, Germany and the European Union (with the exception of Poland and Lativia) will never buy US or any other LNG from other sources until they match the price of the cheaper Russian piped gas.

    Nord Stream 2 is unstoppable. And once it becomes operational, it will bring Russian gas supplies to Germany and the EU no matter how much manoeuvrings the European Commission does over pipeline regulations. Germany will prevail.

    Germany being the biggest economy in the EU will persuade the EU countries that Nord Stream 2 gas pipeline is first and foremost an economic project which will bring uninterrupted and cheap Russian gas supplies to Germany and the EU thus ensuring energy security to the whole of the EU.

    Moreover, Nord Stream 2 will bring extra Russian gas supplies to the EU at a time when the EU demand for gas and LNG is growing by leaps and bound whilst European gas production is projected to decline significantly particularly with the planned shutdown of the Groningen gas field in the Netherlands by 2030.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Bill Simpson on February 14 2019 said:
    The Russians aren't stupid. They will always undercut the price of LNG. Some European countries might pay more for some gas as LNG, just because they want to keep their gas options open. What country wants Putin to be able to shut down their entire economy simply by shutting off their gas supply, leaving no option but to do whatever Putin wishes.

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