Some US$3Bn in US LNG will make its way into the German gas grid as part of a four-year loan deal between the German Government, more than 25 banks including Deutsche Bank and commodities trader Trafigura.
The supply has been agreed based on the loan facility that is partly secured under Germany’s United Financial Loan programme, through the German Export Credit Agency Euler Hermes Aktiengesellschaft.
The loan has been jointly arranged and underwritten by Deutsche Bank and another unnamed international bank and syndicated to more than 25 banks in a transaction that was, according to Trafigura, “1.6 times oversubscribed”.
“The loan will support a new commitment by Trafigura to deliver substantial volumes of gas into the European gas grid, and ultimately into Germany, over the next four years.
Trafigura will supply the gas to Securing Energy for Europe (SEFE), which was recently recapitalised by the German Government. The first gas delivery took place 1 November 2022 and Trafigura will primarily use existing quantities from its global gas and LNG portfolio to help secure gas supplies to SEFE. The agreement included a review of Trafigura’s environmental, social and governance policies and performance,” a statement from the trader said.
“We are proud to be contributing to Europe’s energy security by supplying this significant volume of gas to Germany backed by our extensive portfolio and long-term US LNG contracts,” said Trafigura head of gas and power trading Richard Holtum.
About 50% of Germany’s natural gas has been supplied by Russia in recent years, and as a result, Germany has enacted emergency energy measures, announcing multiple LNG import terminals, including five based on FSRUs, since the start of Russia’s war against Ukraine.
In April, the German Finance Ministry approved spending €2.94Bn (US$3.09Bn) to fund the FSRUs, with Uniper and RWE signing 10-year charter deals on behalf of the German Government to secure two FSRUs each from Höegh LNG and Dynagas and an additional FSRU coming from US-based Excelerate Energy.
The two Höegh LNG 170,000-m3 FSRUs will be deployed in Germany, one at Wilhelmshaven and another at Brunsbüttel as the country’s first LNG import hubs.
The 5Bn-m3 Höegh LNG FSRU is scheduled to arrive at the turn of the year. However, due to the grid capacities, only about 3.5Bn m3 (about 4% of Germany’s gas requirements) of natural gas per year can then be transported via this pipeline before the construction of a new 55-km pipeline is completed.