Hail Shale: Germany Looks To LNG to Cut Germany’s Dependence on Russian Gas

Angela Merkel’s government is seeking to build a liquefied natural gas industry in Germany basically from scratch to reduce the nation’s dependence on supplies arriving by pipeline from Russia and Norway.

With gas reservoirs depleting from the U.K. to the Netherlands, Germany is becoming increasingly reliant on Russia for its energy needs at a time when political tensions are mounting with Vladimir Putin’s government in Moscow.

That’s prompting Merkel to think again about LNG as an option, building terminals on the North Sea and Baltic Sea that could import the fuel and bypass facilities in the neighboring Netherlands, Poland and Belgium. Her newly formed coalition has a “coalition contract” that among other policies sets out an energy agenda including LNG for the next four years.

Merkel backs “all initiatives supporting further diversification of gas supply — whether from different regions or means of transporting gas,” Economy and Energy Ministry spokeswoman Beate Baron said in a note.

The furor between Russia and the U.K. in the wake of the nerve-agent attack on British soil prompted Prime Minister Theresa May to retaliate by expelling Russian diplomats and seeking alternatives to Russian gas, including LNG produced at its new Arctic plant. This followed shipments earlier this year to the U.S., which drew attention because some of the LNG was produced at the Yamal LNG plant that’s been under U.S. financial sanctions.

Less polluting than coal and oil, natural gas is taking a central role in Germany’s effort to make the economy carbon neutral by 2050. That also involves closing coal plants and investing in wind and solar farms.

Gas consumption rose 5 percent last year, the AGEB industry group said on March 16. And since Germany currently has no terminal for importing the fuel in its liquid form and turning it into gas, those supplies arrived by pipeline. Russian gas made up more than 60 percent of Germany’s total imports for most of last year, according to data from Marex Spectron Group Ltd., and the country says its fuel is the most flexible and reliable.