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Venture Global LNG Inc. has struck the first binding deals by a U.S. natural-gas exporter to supply natural gas to a German company, as the European nation turns to America to help replace supplies from Russia.
On Tuesday, Venture Global said it agreed to sell 1.5 million metric tons of liquefied natural gas a year in two separate 20-year deals with German energy company
EnBW Energie Baden-Württemberg AG
, starting in 2026. Half of the amount will come from Venture’s Plaquemines LNG facility under construction in Louisiana, while the other half will come from another proposed facility in that state, it said.
Mike Sabel,
Venture Global’s chief executive, said the agreements were “an important step that manifests Germany’s strategy to diversify its energy mix.”
Germany is fast-tracking the development of LNG import terminals on its northern coast as it seeks to reduce its dependence on Russian energy following Russia’s attack on Ukraine. Germany’s recent support for LNG comes after years in which U.S. companies vying to sell gas into Europe struggled to generate much interest.
Last week, Russia slashed supplies to Europe as it faces tough economic sanctions from Western nations in the wake of the war. On Sunday, Germany said it would restart coal-burning power plants and offer incentives for companies to reduce gas consumption as it seeks to build up gas inventories ahead of winter.
The Biden administration said the U.S. would send more gas to Europe this year and has worked to open doors between U.S. companies and their counterparts in Europe. Venture Global brought its first facility online at Calcasieu Pass in Louisiana earlier this year.
LNG “opens up the possibility of new sources to secure Germany’s gas supply in the current energy transition phase and builds a bridge to a green energy supply,” said Georg Stamatelopoulos, chief operating officer, generation & trading at EnBW.
Last month, Sempra Infrastructure entered a nonbinding agreement to sell LNG to German electricity generation company
RWE AG
from a proposed site in South Texas. Sempra Infrastructure is a subsidiary of
In May, Germany and Qatar also signed an agreement to expand LNG trade.
U.S. natural-gas prices have dropped while European prices have climbed following an explosion that forced Freeport LNG, another U.S. natural-gas shipper, to take its export facility in South Texas offline. The company said it doesn’t expect to fully resume operations until late 2022 as it repairs the facility.
Market participants have viewed the disruption as a cap on overseas exports of American shale gas, freeing up domestic supplies that have been squeezed by record-high exports as European countries scramble to secure LNG following Russia’s invasion of Ukraine.
The shale boom made U.S. natural gas cheap and abundant for more than a decade, but the past few months have marked the first time gas exports have significantly affected U.S. natural-gas prices, analysts and executives said.
Exports of natural gas—by LNG tanker and by pipeline to Mexico and Canada—vaulted to a record in March, to about 22% of U.S. gas production, according to the latest available data from the Energy Information Administration.
Write to Collin Eaton at collin.eaton@wsj.com
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