Ukraine’s Naftogaz backs Scholz’s Canadian LNG bid ahead of the voyage

Ukraine’s Naftogaz backs Scholz’s Canadian LNG bid ahead of the voyage

German Chancellor Olaf Scholz receives Canadian Prime Minister Justin Trudeau on March 9, 2022 in Berlin, Germany. Portal/Michele Tantussi/File Photo

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BERLIN, Aug 20 (Portal) – Shortly before his two-day trip to Canada, Chancellor Olaf Scholz received support for his interest in Canadian liquefied natural gas to replace Russian gas imports from an unexpected ally: Ukraine’s state-owned gas company Naftogaz.

Kyiv has fallen out with Berlin over its gas import policy: first over its deal with Moscow to build the Nord Stream 2 pipeline, and more recently its deal with Canada to ship a repaired Nord Stream 1 turbine back to Germany.

But the prospect of LNG shipments to Europe from Canada, one of the world’s largest gas producers, is something that not only supports Naftogaz, but something it has been quietly working on itself.

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Naftogaz signed a little-publicized MoU with Canadian energy developer Symbio Infrastructure earlier this year to purchase LNG from Canada. Canada and Germany are now discussing the construction of LNG terminals on Canada’s Atlantic coast.

Yuriy Vitrenko, CEO of Naftogaz, told Portal in an emailed statement that Canadian gas has many advantages.

“Canadian suppliers do not have dominance in the German market, do not abuse it like Gazprom, which artificially reduces supplies, corners the market and rips off its customers,” he said.

Still, the challenges to these proposals are significant, German and Canadian officials point out.

The cost of transporting gas from Alberta in western Canada to the east coast would be high. New pipelines would be required and the global shift away from fossil fuels means the terminal’s lifespan would be too short to be viable unless converted to a hydrogen terminal when gas demand falls.

German officials this week conceded that Canadian LNG supplies are a medium-term prospect at best, instead playing up a deal on hydrogen that Scholz will sign with Canadian Prime Minister Justine Trudeau. Continue reading

Sensitive political topic

German government officials don’t want to cause any more headaches for allies Trudeau after there was backlash over his decision to have a turbine for the Nord Stream gas pipeline shipped back to Germany after repairs in Canada.

Scholz and Economy Minister Robert Habeck will also meet with Qu├ębec Prime Minister Francois Legault – from a different political camp than Trudeau – because of the considerable opposition there to the construction of an LNG terminal and the necessary further infrastructure.

Michael Link, the federal government’s transatlantic coordinator, said it made much more sense to import LNG from Canada than from autocratic governments, noting that it was important for Scholz to visit provinces in the state.

“Canada is reliable, democratic and has the highest environmental and social standards,” he said in an interview.

But at the end of the day, even Canadian LNG shipments from the west coast to Asia would help, he said.

“The gas exported there goes to the world market, increasing supply and depressing prices,” he told Portal.

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Reporting by Andreas Rinke; Additional reporting by Steve Scherer; writing by Sarah Marsh; Editing by Christina Fincher

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