Germany Commits to American Gas With First U.S. LNG Offtake Deal
In a strong signal of Germany's plans to diversify its energy supply for the long term, the German utility EnBW announced Tuesday that it has signed a 20-year deal for a substantial supply of LNG from U.S.-based exporter Venture Global.
It is the first time that a German company has ever signed a long-term binding offtake agreement for U.S. LNG, according to Venture Global, and it marks a major policy turnaround.
Before the Russian invasion of Ukraine, Germany's energy policy was heavily oriented towards Russian oil and gas. It had no LNG receiving terminals of its own, nor any well-developed plans to build them. After the invasion, the German government terminated the brand new Nord Stream 2 gas pipeline from Russia, changed permitting procedures to accelerate LNG terminal development, and moved to charter four FSRUs to provide near-term terminal capacity. There are also three active proposals for landside LNG terminals in German ports.
The first FSRU could be up and running through the port of Lubmin, Germany within months, Chancellor Olaf Scholz told Reuters on Tuesday. "Our goal is to get as much as possible there by the turn of the year, or a little bit later, so we can get gas quickly from wherever," he said.
EnBW's landmark agreement with Venture Global suggests that this shift is a long-term strategy. The deal will see EnBW take 0.75 mtpa of LNG from the future Plaquemines LNG terminal (just green-lighted last month) and another 0.75 mtpa from the future CP2 LNG project. Deliveries will start in 2026 and will continue through 2046.
"Our company is honored to become a major provider of LNG to Germany, providing security of supply on a competitive, long-term basis," said Mike Sabel, Venture Global's CEO.
The agreement is timely for Venture Global, which took a final investment decision on its greenfield Plaquemines LNG export terminal in late May. The second phase of Plaquemines LNG will likely reach FID by the end of the year, and it is already "largely sold out," Sabel told Reuters.