The Strategist

WSJ: Merkel agrees to support American gas in Europe

10/23/2018 - 15:35

German Chancellor Angela Merkel offered government support for commercial efforts to create American gas in Germany. This was Merkel’s main concession to US President Donald Trump, who is trying to weaken Russia's position on Europe’s largest energy market, writes The Wall Street Journal.

Sven Mandel
Sven Mandel
This month, Merkel told during a meeting with MPs that the government decided to partially support financing for the construction of a terminal for liquefied natural gas (LNG), which will be located in northern Germany, sources familiar with the negotiations said to WSJ. The state support will become an impetus to development of the project, the newspaper writes.

As The WSJ notes, the American leader Donald Trump has actively lobbied for the sale of large volumes of LNG in Europe. The newspaper writes that exports of American LNG to Europe rose sharply last year, but Germany did not buy it. According to sources, Merkel did not perceive her change in attitude towards American gas as a defeat during the meeting, but called it a “strategic” decision that could pay off in the long run.

Officials from the United States and Germany said that Berlin hoped that the issue with American gas could help resolve a protracted trade dispute and perhaps even smooth out Washington’s threats to impose sanctions because of the Nord Stream-2 gas pipeline, which could double the current volume of gas exports from Russia to Germany.

For many years, plans to build an LNG terminal have been stalled due to the lack of government support that would make the project economically justified. One of the first applications for state aid was submitted for the construction of a terminal in the city of Stade, near Hamburg, in October.

Nevertheless, it is still unclear what kind of support will be provided by Berlin and in what form - subsidies, loans, loan guarantees, protection of investors or all measures at once. According to sources, it is likely that a decision on this issue will be made before the end of the year.

Earlier, the representative of the German Foreign Ministry Andreas Michaelis criticized the American influence on European energy policy.

While speaking at the Aspen Institute conference, Michaelis said that Germany would continue to participate in the construction of the Nord Stream 2 gas pipeline, despite Washington’s position.

“This refers to the key interests of Europe. I do not want Washington to determine European energy policy. <...> I am not going to accept that at the end of the day Washington decides that we should not rely on Russian gas and that we should not complete the construction of the gas pipeline,” the German diplomat said.

A few days before, US Republican Senator Ron Johnson and Democrat Chris Murphy presented a bill that provides for allocation of a billion dollars to finance European energy projects.

Murphy said that most of Europe relies on Russian energy. Russia allegedly uses its dominance in the European market, as well as corruption, bribery and propaganda, to “undermine” Western institutions and influence the EU countries so that they cannot resist the Russian Federation, the senator said.


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