German utility RWE announced that it has inked an agreement with Abu Dhabi National Oil Company (ADNOC) to deliver liquefied natural gas to Germany, Reuters reported.
Chancellor Olaf Scholz is trying to strengthen ties with the Gulf and discover alternative energy sources, so even though the initial amount to be provided is not huge, it is a politically significant deal to support supply of gas from outside of Russia.
On the second day of a two-day visit to the Gulf region by Scholz, the deal—which includes an arrangement for multiple-year LNG supplies—was reached.
“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.
According to statistics from research firm Enerdata, Germany’s two new proposed floating LNG terminals will eventually be able to accept up to 12.5 billion cubic meters of LNG annually, or almost 13% of the nation’s gas consumption in 2021.
“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 that a variety of agreements, such as the LNG contract reached with Abu Dhabi, will help to temper the sharp rise in energy prices.
Along with providing RWE, ADNOC has also agreed to provide ammonia to German businesses including Steag and Aurubis (NAFG.DE). Additionally, it will deliver 250,000 tons of diesel per month to the German company Hoyer.
Sheikh Mohammed bin Zayed al-Nahyan, the president of the United Arab Emirates, signed a deal with Scholz earlier on Sunday that focuses on promoting economic development and energy security.
Separately, the wind energy development off the German coast will be investigated by Masdar, a UAE-based renewable energy firm.