25 Sep , 2022 By : Kaushiki Mehta
German utility RWE has signed a deal with Abu Dhabi National Oil Company (ADNOC) to deliver liquefied natural gas to Europe's largest economy by the end of December, RWE announced on Sunday.
Though the initial amount to be delivered is relatively small, it's a politically significant deal to shore up supplies of gas from outside of Russia as Chancellor Olaf Scholz seeks to deepen ties with the Gulf and find alternative energy sources.
The deal, which includes a memorandum of understanding for multi-year supplies of LNG, came on the second day of a two-day trip to the Gulf region by Scholz.
"We need to make sure that the production of LNG in the world is advanced to the point where the high demand that exists can be met without having to resort to the production capacity that exists in Russia," Scholz told journalists before the deal was announced.
The cargo to be delivered this year by ADNOC will be for 137,000 cubic metres of LNG and will be the first LNG to be supplied to the German gas market via the floating LNG import terminal at Brunsbuttel near Hamburg, RWE said.
ADNOC further reserved an unspecified number of LNG cargoes for Germany in 2023.
Germany's two new planned floating LNG terminals will eventually be able to receive up to 12.5 billion cubic meters of LNG a year, equivalent to about 13% of the country's gas consumption in 2021, according to data from research firm Enerdata.
"This marks an important milestone in building up an LNG supply infrastructure in Germany and setting up a more diversified gas supply," RWE said in a statement.
German officials hope an array of deals, like the one struck with Abu Dhabi for LNG, will help take the edge off skyrocketing energy prices.
Meanwhile, frustrated Germans protested on Sunday, calling to put into service the halted Nord Stream 2 pipeline project that was designed to transport fuel from Russia to Germany but was put on ice after the war in Ukraine broke out.
"Immediately open Nord Stream 2," read one placard. "Opening Nord Stream 2 = Prevention", read another. Organizers expected some 5,000 protestors in the city of Lubmin, where the pipeline lands in Germany.
In addition to supplying RWE, ADNOC has also agreed to sell ammonia to German companies, including Steag and Aurubis . It will also provide 250,000 tonnes of diesel a month to German firm Hoyer.
Earlier on Sunday, the president of the United Arab Emirates, Sheikh Mohammed bin Zayed al-Nahyan, signed an agreement with Scholz that covers accelerating energy security and industrial growth.
Separately, the UAE renewable energy company Masdar will explore wind energy development off the German coast.
Scholz travelled to Qatar after his meetings in Abu Dhabi. On Saturday, he held talks in Jeddah with Saudi Arabia's Crown Prince Mohammed bin Salman.