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US, Germany defuse energy dispute, easing tensions

Berlin

RELATIONS between the United States and Germany have mostly gone downhill since President Donald Trump took office. But on Tuesday they took an unexpected turn for the better.

Officials in Berlin agreed to help finance a port to import liquefied natural gas from the United States, a key US demand. In return, the US government is toning down its opposition to an underwater pipeline being built to Germany from Russia.

The unofficial agreement, announced in Berlin by high-ranking US and German officials, marked a rare case of rapprochement in a relationship that has been severely strained by US tariffs on European steel, continued threats to impose levies on German cars and personal enmity between Mr Trump and German Chancellor Angela Merkel.

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Germany's gas supply had become a major point of contention. Last year, officials in Brussels promised to buy more American natural gas as a way of answering complaints by the Trump administration that trans-Atlantic trade favours Europe.

At the same time, though, Germany continued to support construction of a pipeline under the Baltic Sea that would deliver gas from Russia. The project annoyed the United States as well as European countries like Poland, Slovakia and the Baltic States.

Both the United States and Germany made concessions on Tuesday, an unusual occurrence in the recent history of trans-Atlantic relations.

Peter Altmaier, the German Minister for the Economy and Energy, said the government would support construction of at least one terminal, probably in the vicinity of Hamburg, for offloading liquefied natural gas, or LNG, from special tankers. While the gas could come from anywhere, the project is seen as a way to open Germany to gas producers in Texas and other states.

Dan Brouillette, the US deputy secretary of energy, said he was encouraged by Germany's plans, although he did not specifically promise that the United States would stop trying to interfere with the pipeline from Russia, known as Nord Stream 2. "We will be watching this very closely," he said.

The pipeline is fraught with geopolitical significance. US officials had gone so far as to threaten sanctions against companies building it, saying it would make Germany even more dependent on Russian energy. Countries including France and Poland shared US concerns.

"It is important to send the signal that we are ready to make progress; we are ready to cooperate," Mr Altmaier said during an appearance with Mr Brouillette at a conference that included representatives of German industry.

Both men said there was no formal deal, but they exuded relief that at least one point of conflict has been eased.

Analysts say that a terminal for liquefied natural gas on Germany's northern shore, where the port would be built, is probably superfluous. Terminals in Belgium, the Netherlands and Poland can pump gas into Germany's network and are operating far below capacity. And gas transported in tankers is likely to be much more expensive than gas sent by pipeline from Russia.

"If the Germans want to import LNG, the obvious way to do it is by the Belgian terminal or the Dutch terminal - not to build their own terminal," said Jonathan Stern, distinguished research fellow at the Oxford Institute for Energy Studies. "But this is how politics intruded into the situation."

The Germans are eager to prevent the Trump administration from following through on threats to impose tariffs on imported Mercedes, Porsche, BMW and Audi vehicles. The Commerce Department is expected to submit a report within days that would establish a legal pretense for doing so.

By taking steps to import more gas, the Germans are addressing Mr Trump's complaints that Germany sells more goods to the United States than it imports.

Many details of the gas infrastructure remain unresolved, including precisely where it would be built and how much money the government would provide.

"We are talking about substantial, but reasonable sums that will contribute to Germany becoming one of the 50 countries that will have LNG terminals," Mr Altmaier said.

It will be at least two years and perhaps longer before any terminals begin operating, and they face energetic opposition from environmental groups, which argue that liquefied natural gas is inefficient because of the energy required to liquefy the gas, transport it in ships and convert it back to gas.

Gas imported from the United States faces especially stiff opposition because it is associated with the technique known as fracking, which some groups blame for environmental damage like water pollution.

Mr Brouillette said that having more liquefied natural gas terminals would promote competition and help drive down the price. Gas is an increasingly important energy source in Germany, which plans to shut down the last of its nuclear power plants by 2022 and quit burning coal within the next two decades.

"We think these terminals provide not only diversity, but competition to pipeline gas throughout Europe," Mr Brouillette said. "So we are encouraged by the actions that were taken most recently by the minister and the German government with regard to those terminals." NYTIMES