UAE signs 15-year LNG deal with Germany starting 2028
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Adnoc will provide SEFE with an annual supply of 1 million tons of LNG.
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Mohamed bin Zayed Al Nahyan, President of the UAE, right, and German Chancellor Olaf Scholz, talk before a meeting at Al Shati palace in Abu Dhabi, UAE, September 25, 2022. (AP)
The UAE has reached an agreement to sell liquefied natural gas to Germany for 15 years starting 2028, Bloomberg reported. This deal solidifies Europe's reliance on fossil fuels and supports the UAE's ambitions to emerge as a significant supplier in the region.
Abu Dhabi National Oil Co. (Adnoc) and the German state-owned energy group SEFE have entered into a preliminary agreement for the annual shipment of 1 million tons of liquefied natural gas (LNG). The LNG will be sourced from an export facility in Ruwais, near Abu Dhabi, which Adnoc intends to construct, as stated by both companies in separate announcements.
The UAE is actively seeking agreements worldwide to increase its export capacity of natural gas. In parallel, Germany has accelerated its importation of LNG and is swiftly acquiring shipments via sea routes, prompted by the reduction in pipeline gas supplies from Russia following the war in Ukraine.
The largest economy in Europe has recognized the significant role that gas will play shortly, particularly as it aims to phase out coal by the end of the current decade. Its long-term goal reportedly involves transitioning to cleaner energy sources and actively promoting the development of hydrogen infrastructure. Germany reportedly aspires to achieve climate neutrality by 2045.
“Gas accounts for almost a quarter of Germany’s primary energy use, and we look forward to supporting its efforts to diversify its energy sources and enhance its energy security,” Fatema Al Nuaimi, Adnoc’s executive vice president for downstream business management, said in a statement.
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Adnoc's agreement with SEFE hinges on finalizing the investment decision for the Ruwais LNG project, expected by the UAE firm this year, as well as reaching a definitive sales and purchase agreement between the two entities. Adnoc has taken steps toward the development of the facility by awarding initial engineering and construction contracts earlier this month.
Additionally, Adnoc previously entered into a 15-year deal with China's ENN for the annual supply of at least 1 million tons of LNG from Ruwais, signed last year. The projected annual export capacity of the project is 9.6 million tons. Adnoc already operates a 6 million-ton facility on Das Island, which commenced operations in 1977.
SEFE has been increasing its gas supply since it was nationalized by the German government in 2022, formerly a unit of Gazprom PJSC. The company has secured agreements with Equinor ASA from Norway and Venture Global LNG Inc. to ensure a continuous flow of gas to industries and households in Germany.
Read next: Germany still purchases Russian gas via Netherlands, Belgium
