LNG

Sonatrach, the Algerian national energy company, has signed a supply contract for pipeline natural gas to be delivered to Germany via pipelines to southern European as the Germans now appear to be less enthusiastic about replacing Russian gas with LNG imports from the US and Qatar.

The pipeline gas agreement was signed during a visit to Algiers by German ministers and is with Leipzig-based VNG Handel & Vertrieb GmbH, a wholly owned subsidiary of VNG AG.

The VNG group is involved in energy trading and sales as well as natural gas and energy transportation by pipeline and gas storage. 

No details were released on the length of the supply contract nor on the volumes of natural gas Algeria would be delivering to Germany from its output of more than 100 billion cubic metres per annum.

Sonatrach, the national oil and gas company with two LNG export plants at Arzew and Skikda on the Mediterranean Coast as well as gas pipelines connected to Spain and Italy, said the deal was signed at a ceremony chaired by Algeria’s Minister of Energy and Mines Mohamed Arkab.

Green-backed gas deal

The signing of the VNG natural gas deal was also witnessed by the visiting German Vice-Chancellor and Federal Minister of Economic Affairs and Climate Action, Robert Habeck, who is a member of the left-wing Green Party in the three-party German coalition government.

Rachid Hachichi, the Chief Executive of Sonatrach and his VNG counterpart Ulf Heitmüller spoke at the signing ceremony.

“I must express my satisfaction with the strengthening of the energy partnership with Europe through this historic contract with the company VNG, which will lead to the start of natural gas deliveries to Germany,” stated Hachichi.

Ulf Heitmüller, the CEO of VNG, said he was delighted to have been able to conclude a medium-term gas supply contract with Sonatrach.

“VNG thus becomes the first German company to purchase gas via pipeline from Algeria,” Heitmüller added.

Energy partnership

“This contract lays the foundations for a relationship of trust in terms of supply, opens new perspectives and strengthens the German-Algerian energy partnership,” stated the VNG CEO.

VNG’s Heitmüller added that Algerian natural gas would now be “an essential part” of guaranteed energy security for Germany,

“The purchase of Algerian gas via pipeline to Germany constitutes an additional diversification of VNG's purchasing portfolio, thus strengthening its position as a reliable partner towards its customers and making the company an important contributor to security of supplies,” Heitmüller declared.

Europe’s largest liquefied natural gas import terminal, the UK’s Isle of Grain facility on the Medway River in Kent, has extended its capacity agreement with the Algerian national energy company Sonatrach.

Grain LNG, owned by a subsidiary of National Grid Plc, said a 10-year agreement was signed to extend the long-term storage and redelivery capacity of Sonatrach at the UK terminal from January 2029.

This is the first agreement signed for around 3 million tonnes per annum of capacity from Grain LNG’s competitive auction process which was launched in September 2023.

“The successful outcome of the auction further secures the future of Europe’s largest terminal into the next decade,” said the company.

The Grain LNG terminal, sited about 43 miles (69 kilometres) southeast of London, is currently expanding to store and deliver enough gas to meet up to 33 percent of UK gas demand.

Security

“This helps ensure the UK’s energy security as LNG imports play a critical role in making sure the UK has the gas it needs, when it needs it and providing a flexible and reliable supply to heat peoples’ homes and to complement the growth of renewable generation,” said Katie Jackson, President of National Grid Ventures, owner of the terminal.

“This agreement ensures that Grain will continue to have a diverse supplier base within the Atlantic Basin,” added Jackson.

“I am delighted that Sonatrach have once again shown a long-term commitment to our world-class site which UK consumers rely on, and I look forward to continuing our working relationship with them in the coming years,” she stated.

Mayouf Belgacem, Executive Vice President of Sonatrach, said LNG would continue to play a critical role in worldwide energy supply.

Algeria, the longest-standing global exporter of LNG supplies to Europe, operates two liquefaction and export plants at Skikda and Arzew on the Mediterranean Coast.

“We have expressed our willingness to strengthen our position as a long-term partner of Grain LNG and as a substantial contributor to UK gas security of supply,” Belgacem explained.

Guaranteed access

“Besides, this agreement offers Sonatrach guaranteed access to Europe’s largest terminal which helps line up Sonatrach’s long-term marketing strategy by diversifying its markets,” said the Sonatrach executive .

The Isle of Grain terminal had launched its auction for 9 MTPA of existing capacity and Sonatrach has now been a leading beneficiary.

There is also an expansion project underway at the UK facility that will see LNG storage at the terminal increase in 2025 to around 1.2 million cubic metres.

In the past 12 months the UK terminal has unloaded almost 120 carriers originating from multiple countries.

In addition to Algerian volumes, the terminal has received cargoes from the US, Qatar, Angola, Nigeria, Norway, Peru and Trinidad and Tobago.

Grain LNG, as part of the National Grid Ventures subsidiary, operates outside of National Grid’s core regulated businesses in the UK.

National Grid Ventures has a diverse portfolio including subsea electricity interconnectors, competitive transmission, wind and solar generation, battery storage as well as the Grain LNG storage and regasification infrastructure.

Italian energy major Eni has delivered the first commercial liquefied natural gas shipment to the nation’s fourth import terminal at the Tuscan port of Piombino.

May 15 (LNGJ) - The UK is scheduled to receive two LNG cargoes in the next two days. The “Kool Firn” vessel with 174,000 cubic metres of capacity is due to discharge a US shipment on May 16 at the South Hook terminal in Milford Haven from Sabine Pass in Louisiana.

   A second cargo is expected to arrive in the UK on May 17 at the Isle of Grain terminal on the Medway River in Kent on board the Algerian Med-class vessel “Cheikh Bouamama” with capacity of 74,245 cubic metres. The cargo was lifted on May 11 from Algeria’s Skikda export plant.

Eni, the Italian energy major and significant liquefied natural gas developer and market participant, has started production from two natural gas fields within the new Berkine South contract in Algeria.

The European Union’s Commissioner for Energy Kadri Simson is in Algeria for two days of talks on strengthening the EU’s energy cooperation with the Algerians after the failure of an EU summit last week to agree a natural gas price cap that would have affected LNG trading.

The Government of Algerian said it intended to increase its natural gas supplies to Italy to reach a total of around 27 billion cubic metres by the end of 2022.

Eni, the Italian energy major and significant liquefied natural gas developer and market participant, said it agreed to acquire natural gas fields in Algeria from UK major BP because of the “great strategic value” they now held.

Algerian energy company and LNG exporter Sonatrach is on track to make $50 billion record earnings this year and the North African nation also attended talks during the week on the 4,000-kilometre Trans-Saharan Gas Pipeline (TSGP) from Nigeria via Algeria to bring African natural gas to Europe.

Sonatrach, the Algerian national energy company and LNG producer, said it signed an agreement worth US$490 million with Chinese major Sinopec in the form of a production sharing contract for the Zarzaitine block in the Illizi basin of eastern Algeria.