Germany in talks with Iran to buy liquid natural gas

German utility E.On AG said Tuesday it was in talks with Iran about a potential deal to buy liquid natural gas - a step that could help Germany ease its dependence on Russian gas amid concern about whether Moscow is a reliable supplier.

Photo: Germany in talks with Iran to buy liquid natural gas

The news comes even as western countries - including Germany - discuss further sanctions against Tehran in an effort to get it to abandon its disputed nuclear program.

Iran is one of the countries E.On has been considering as it seeks a source of liquid natural gas, said Tatjana Dreyer, a spokeswoman for E.On Ruhrgas, E.On's gas division.

"E.On Ruhrgas has for some time been looking into the possibility of obtaining LNG and is in talks with various producers," Dreyer said. "One of the producer countries is of course Iran. The country has the world's second-largest natural gas reserves."

The company's comments appeared to acknowledge the political sensitivity of exploring a gas deal while Iran is under pressure from the international community to abandon its uranium enrichment program.

"In our dealings with the country, we are strictly complying with the rules and requirements set out in the German government's policy," Dreyer said. "To this end we are in close contact with the responsible government offices."

E.On Ruhrgas would need permission from the German government to enter into a gas deal with a supplier in Iran or any other country, Economy Ministry spokesman Steffen Moritz said.

Iran says it needs the enriched uranium for nuclear power plants, but the United States has accused it of conducting a secret program to develop nuclear weapons.

Iran's refusal to freeze all its enrichment-related activities prompted the U.N. Security Council on Dec. 23 to impose sanctions targeting the country's nuclear and missile programs and the individuals, companies and organizations involved in them.

Diplomats from the United States, Britain, France, China, Russia and Germany have been discussing the possibility of further sanctions, but no agreement has yet been reached.

E.On Ruhrgas is seeking a long-term supply of liquid natural gas for a new reception terminal it wants to build at Wilhelmshaven on Germany's north coast. The company has a memorandum of understanding with Algerian producer Sonatrach, but no gas deal as yet.

Liquid natural gas comes in special refrigerated ships instead of the pipelines that bring gas to Germany from Russia, the AP says.

That means it is more flexible, as supplies could come by ship from any producer with a terminal to cool the gas into liquid form. The gas is then warmed at the receiving end and fed into pipelines.

Concerns about the reliability of Russian oil and gas supplies has risen after Russia cut off supplies to pipelines running through Belarus and Ukraine to Europe in pricing disputes with those countries. Still, former Chancellor Gerhard Schroeder - who chairs a joint venture to built a Baltic Sea pipeline importing Russian gas - has warned that Russia compares favorably in terms of stability to other energy suppliers such as Iraq and Iran.

Germany gets about a third of its natural gas needs from Russia and demand for gas is expected to rise in the coming years.

E.On shares edged up 0.2 percent to EUR 96.26 (US$126.47) in Frankfurt trading.