Europe Strikes Major LNG Deal with U.S.

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The European Union (EU) is to get a significant boost in liquefied natural gas (LNG) imports from the U.S. this year as part of a plan to reduce its dependency on Russian gas.

In a joint statement on energy, European Commission President Ursula von der Leyen and U.S. President Joe Biden revealed that the U.S. will supply at least 15 billion cubic meters (Bcm) of LNG to EU countries by the end of 2022. This will effectively replace the amount of LNG that Europe traditionally gets from Russia.

At a conference fronted by both leaders, von der Leyen said: "This support also extends to strengthening Europe's energy security and independence from Russian fossil fuels. As you know, we aim to reduce this dependency on Russian fossil fuels and to get rid of it. And this can only be achieved through, of course, first of all, investment in renewables, but also through additional gas supplies, including LNG deliveries. So we want, as Europeans, to diversify away from Russia towards suppliers that we trust, that are our friends and that are reliable. Therefore, the U.S. commitment to provide the European Union with additional, at least, 15 billion cubic meters of LNG this year is a big step in this direction. Because this will replace the LNG supply we currently receive from Russia."

She added: "And looking ahead, the United States and Europe will ensure stable demand and supply for additional, at least, 50 billion cubic meters of U.S. LNG until 2030."

Biden said: "Today, I'm proud to once again be standing together with President von der Leyen as we announce a new groundbreaking initiative between the European Union and the United States. First, we're coming together to reduce Europe's dependence on Russian energy. Today we've agreed on a joint game plan toward that goal while accelerating our progress toward a secure clean energy future. This initiative focuses on two core issues: One, helping Europe reduce its dependency on Russian gas as quickly as possible. And, secondly, reducing Europe's demand for gas overall."

To cope with additional imports, the EU is looking to roll out more storage terminals. The new strategy will see the European Commission working with member states to "accelerate their regulatory procedures to review and determine approvals for LNG import infrastructure, to include onshore facilities and related pipelines to support imports using floating storage regasification unit vessels, and fixed LNG import terminals."

Germany, which has a 90% dependence on gas imports, has no LNG terminals but the war in Ukraine has accelerated the country's efforts. In late February, the government announced that it would support the rapid construction of the country's first two LNG import terminals as part of its efforts to secure energy supply. Chancellor Olaf Scholz said: "We made the decision to quickly build two liquefied natural gas terminals, LNG terminals, in Brunsbüttel and Wilhelmshaven. The events of the last few days and weeks have shown us that a responsible and forward-looking energy policy is not only crucial for our economy and our climate, but also crucial for our security. What is needed now in the short term can be combined with what is needed anyway in the long term for the success of the transformation [into a carbon-neutral economy]. An LNG terminal that receives gas today can also receive green hydrogen tomorrow."

Industrial Info is tracking both the Brunsbüttel and Wilhelmshaven projects, worth almost US$700 million in investment. Brunsbüttel will encompass building a port for handling LNG and will cover, among other things, a jetty with two berthing facilities for ships up to Q-Max size--the largest class of LNG ship--as well as facilities for distributing LNG by trucks, rail tank cars and smaller ships. The terminal will be able to feed up to 8 billion normal cubic meters (Nm3) of natural gas to the grid each year. At Wilhelmshaven, the plan is to have a floating storage and regasification unit (FSRU) with a planned send-out capacity of 10 Bcm/yr and an LNG storage capacity of 263,000 cubic meters. Subscribers to Industrial Info's Global Market Intelligence (GMI) Terminals Project Database can click here for the Brunsbüttel project report and here for the Wilhelmshaven project report.

Industrial Info is also tracking a third German LNG project at Stade, in Lower Saxony. Hanseatic Energy Hub Gmbh (Hamburg, Germany) is spearheading a larger 12 Bcm/yr terminal project worth in excess of US$750 million. Subscribers can click here for the project report.

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