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German energy major Uniper has made an agreement with German authorities to build the country’s first liquefied natural gas (LNG) terminal to enable the country reduce its reliance on Russian gas.

The decision was announced at a press conference attended by German Federal Minister Robert Habeck and the Lower Saxony Ministers Olaf Lies, and Bernd Althusmann.

Uniper will serve as the builder and operator of the terminal, which is estimated to cost approximately $68.5m.

The federal government has also signed a letter of intent to charter four floating storage and regasification units (FSRUs) to import gas.

Of these four units, two FSRUs owned by Greece-based Dynagas will be operated by Uniper while energy company RWE will operate the other two units, which are owned by Hoegh LNG.

Each of the FSRUs will have a total natural gas-send-out capacity of up to 7.5 billion cubic metres per year and an LNG storage capacity of 174,000m³.

Uniper CEO Klaus-Dieter Maubach said: “Russia’s war against Ukraine has turned the world we live in upside down, this is especially true for the energy industry.

“We are doing our utmost to support the German government in its plan to diversify Germany’s sources of supply for natural gas and, in the long term, also for hydrogen. With our LNG terminal, we are taking an important step, in close cooperation with the German government, towards the desired energy independence.

“In the medium and long term, we are developing Wilhelmshaven into the energy hub of the future, with a focus on hydrogen and green gases.”

In a separate announcement, Germany’s PCK Schwedt refinery, in which Shell owns a minority stake, is expected to reduce output as a result of the Russian oil cut, reported Reuters, citing Shell’s chief executive.

The 233,000 barrel-per-day refinery, which is majority-owned by Russia’s Rosneft , now receives feed via the Druzhba pipeline.

To address the issue, Germany is in discussions with Poland over potentially routing some crude supplies to Schwedt from the port of Gdansk.