German utility VNG AG signed a deal for the delivery of pipeline gas from Algerian state energy giant Sonatrach, according to people familiar with the matter.
The Leipzig-based company, controlled by EnBW Baden-Wuerttemberg AG, is the first German gas trader to reach such an agreement with the North African country, said the people who asked not to be named as the business is private. The deal took effect earlier this year, they said.
The terms of the agreement, including length and volumes, weren’t immediately clear. VNG declined to comment. Sonatrach didn’t immediately respond to a request for comment.
Europe’s largest economy has been struggling to find alternative supplies after former top-provider Russia curbed deliveries in the wake of the war in Ukraine. The region has mainly filled the gap with liquefied natural gas.
Long-term gas delivery contracts are still scarce in Germany, with importers mainly relying on the volatile spot market. The US — a top global supplier of LNG — has imposed a moratorium on new export licenses while it studies the climate and economic impacts, creating uncertainty for the market.
VNG in December 2022 agreed to collaborate with Sonatrach on energy matters, with the intent to create a German-Algerian value chain for hydrogen. The gas group’s Chief Executive Officer Ulf Heitmueller is listed as part of the delegation accompanying Economy Minister Robert Habeck in Algeria this week. Uniper SE CEO Michael Lewis is also among the participants.
Habeck is set to sign a bilateral hydrogen agreement with Algerian Energy Minister Mohamed Arkab on Thursday. Algeria aims to send green hydrogen from renewables to the European Union via an underwater gas pipeline grid. Feasibility studies for the project are under way.
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