The US has welcomed an announcement by Germany that it will build at least two liquefied natural gas (LNG) terminals, a move that could pave the way for American exports to one of Europe’s largest energy markets.
The announcement could also help to address US concerns over Nord Stream 2, a gas pipeline being built to link Russia to Germany, which Washington worries will increase Europe’s dependence on Russian energy imports.
In an interview with the Financial Times, Dan Brouillette, the US deputy energy secretary, said he was “very excited” at the German move on terminals, describing it as “potentially a great opportunity for US LNG”.
“We remain concerned by Germany’s increasing reliance on Russia for its gas, so anything it does to improve diversity is a good step,” he told the FT. But he insisted that the US was still “not going to drop [its] objections” to Nord Stream 2.
He was speaking on the fringes of an LNG conference hosted in Berlin by Peter Altmaier, Germany’s economy minister, which brought together US and German officials, American gas exporters and European companies seeking to import liquefied natural gas into Germany.
Mr Altmaier said the two terminals, the first in Germany, would be backed by state subsidies.
Nord Stream 2 has become a major irritant in relations between the US and Germany, especially after the US ambassador to Berlin, Richard Grenell, warned German companies involved in the project last month that they could face sanctions if they continued work on the $9.5bn pipeline.
US president Donald Trump has said Germany is a “captive” of Moscow because of its reliance on Russian gas.
Nord Stream 2 would allow Gazprom, the state-owned Russian gas giant, to bypass Ukraine’s gas transit system. That has fuelled concerns in Europe and the US that Kiev would become more vulnerable to Russian pressure and could lose out on lucrative transit fees.
Mr Brouillette said “all companies” doing business on Nord Stream 2 “remain at risk of US sanctions” — including companies laying the pipe and financial backers such as European energy giants Engie, OMV and Royal Dutch Shell.
Germany has tried to assuage American criticism of the project in two ways: first by trying to win assurances from Vladimir Putin, the Russian president, that Gazprom will continue to export its gas through Ukraine even after Nord Stream 2 is completed.
By moving ahead with plans to import LNG, Berlin is also hoping to silence US accusations that it is becoming too reliant on Russian hydrocarbons.
However, experts have said that even if the German terminals are constructed, demand for US LNG will be low because it is considerably more expensive than Russian pipeline gas. LNG is cooled to approximately minus 160 degrees Celsius and then shipped to market on tankers.
In the interview, Mr Brouillette said the price of US LNG would fall as more and more export terminals are built and domestic gas production continues to increase. He said four new terminals are “under active consideration by the regulator” and, if approved and built, would bring the total number of US export facilities to 10.
As new terminals come on line, “you’ll begin to see US LNG prices go down — because of competition between players who own those facilities”, he said.
Mr Brouillette also welcomed a decision by EU countries last Friday to toughen their rules on Nord Stream 2. Ambassadors to the bloc agreed that the project must meet the four EU energy rules, including on “ownership unbundling” — that is, ensuring that the pipeline is not owned directly by the gas supplier. The rules also dictate that at least 10 per cent of the line’s capacity must be offered to third parties.
But under a Franco-German compromise, EU ambassadors also agreed that the member state where the import pipeline lands — in this case Germany — will decide how to apply those rules.
Mr Brouillette said the US was “encouraged” that some European countries had raised the same concerns as the US had, and that the EU had “chosen to . . . level the playing field and . . . impose the same regulations to Nord Stream 2 that it applies to other pipelines”.