State-owned German energy group Uniper is holding talks with Canada to expand its liquefied natural gas purchases, three people familiar with the matter said, as part of Berlin’s plans to strike a broad economic partnership and cut reliance on U.S. supplies. The discussions, which the sources said are taking place on a corporate and political level, are happening as Germany pitches for a Canadian submarine tender that is likely to involve deals in other areas, including rare earths, batteries and energy.
Uniper declined to comment on specific talks, while saying that it was continuously seeking to diversify supply and that Canada was interesting due to its stable regulatory environment, gas resources and LNG prospects. The talks also reflect fears that Germany may be too dependent on the United States for energy supplies, as it continues to reel from an energy crisis that hit Europe’s top economy after former top gas supplier Russia stopped delivering. At the same time, the U.S.-Israel war with Iran has forced the shutdown of some oil and gas fields in the Middle East, only weeks after Germany’s Economy Minister travelled to Saudi Arabia with the aim of expanding energy cooperation.
U.S. SUPPLIES MOST LNG
The United States accounted for 96% of Germany’s LNG imports last year, when Uniper also struck a first long-term agreement with Canada’s Tourmaline.
The lack of regasification capacity on Canada’s East coast is a potential hurdle in the talks and may require the construction of terminals there, the people said.
Canada’s LNG sector is heavily skewed west, where all current and emerging export capacity is located, while the east coast has virtually no infrastructure beyond Repsol’s Saint John terminal. Canada has been seeking alternative offtakers to reduce its gas export dependency on the United States, including Japan, India and Malaysia.
Germany’s economy ministry said there was an expectation that any submarine tender award would generate added value in the client’s country as part of a so-called offset agreement, adding it was supporting such efforts.
Canada’s department of natural resources said it was aware of Germany’s interest in LNG imports, saying decisions to move projects to construction as well as LNG sales were up to the private sector.
(Reporting by Christoph Steitz and Marwa Rashad; additional reporting by Amanda Stephenson; editing by Nina Chestney, Kirsten Donovan)