RWE Adds African Producers to Talks on Supplying German Terminal

(Bloomberg) -- Africa is joining Qatar and the U.S. on the list of potential suppliers of liquefied natural gas to Germany’s first import terminal for the fuel.

Talks are underway with African LNG producers to supply the planned German facility, as well as with Qatar, the world’s biggest producer, said Andree Stracke, chief commercial officer at RWE AG’s supply and trading unit. The German utility has agreed to take capacity in the proposed terminal near Hamburg.

“I am talking to African LNG producers and to U.S. producers as well,” Stracke said in an interview, without naming any companies. “Some African LNG is very likely to show up in Europe, therefore why not allocate it?”

While 80 percent of northwestern LNG terminals are mainly idle today, RWE is betting that more fuel will come to the region because indigenous production is falling. Africa has a geographical advantage to supply Europe, and Nigeria, the region’s biggest producer, plans to build a seventh production line, or train, to compete with the growing output from Qatar and the U.S.

RWE Adds African Producers to Talks on Supplying German Terminal

German LNG Terminal GmbH plans to build a terminal at Brunsbuettel near Hamburg as authorities look to diversify supply sources at a time when Russia is sending record volumes of gas and domestic production is declining. U.S. President Donald Trump is pitching his country’s LNG to nations from Germany to Poland in a bid to make Europe a “massive” buyer of the U.S. fuel.

In Germany, there’s a political push to diversify sources and a shortage in the grid where the terminal will connect. RWE also plans to use more gas in power plants as nuclear reactors shut and coal-fired generation will likely be reduced.

Having LNG producers backing up with supplies at the terminal means the facility won’t be idle, he said.

“That is a potential difference to other projects,” Stracke said at the Gastech event in Barcelona, which brings together everyone from the producers to the buyers of LNG. “I do not believe that neither RWE nor others just build capacities in order to have capacities because we have an excess today. I do believe certain producers have distinct interest in bringing LNG to Germany.”

RWE plans to make a decision on the supply choices for the terminal next year, Stracke said. The Brunsbuettel terminal hasn’t yet made a final investment decision on whether the facility will be built, but targets operations starting by the end of 2022.

Qatar Petroleum on Monday confirmed it was in talks with RWE as well as another German utility, Uniper SE, on supplying LNG to Germany.

Nigeria LNG said Tuesday it’s in talks with a range of customers from Asia to Europe to allocate volumes expiring in 2021-2023 from its older trains 1, 2, and 3.

Other African producers include Algeria, Egypt, Angola and Equatorial Guinea.

©2018 Bloomberg L.P.