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UAE's ADNOC to supply Germany with LNG and diesel cargoes in 2022, 2023

Highlights

ADNOC to supply first LNG cargo to FSRU in Brunsbuttel in 2022

First diesel delivery to Germany in Sept to be followed by more cargoes in 2023

Deals signed as Scholz visits UAE, Qatar for energy

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The UAE's Abu Dhabi National Oil Co. will supply German companies with LNG and diesel cargoes in 2022 and 2023 as Europe's biggest oil consumer seeks to diversify energy sources amid reduced supply of Russian gas and upcoming European Union sanctions on crude and oil product imports from Moscow.

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As part of a new Energy Security and Industry Accelerator agreement signed between the UAE and Germany, ADNOC will supply RWE with an LNG cargo in late 2022 to be used in the country's floating LNG import terminal in Brunsbuttel, state-run WAM news agency reported Sept. 25.

ADNOC has also earmarked several other LNG cargoes for German customers for delivery in 2023, the agency said, without disclosing further details.

The agreements were signed during a state visit by German Chancellor Olaf Scholz to the UAE, the second stop on a three-country trip that started in Saudi Arabia and will take him next to Qatar, where other energy deals are expected to be signed.

ADNOC, which completed its first ever direct diesel delivery to Germany in September, has agreed to the terms with Wilhelm Hoyer GmbH & Co. on the supply of up to 250,000 mt of diesel per month in 2023, WAM said.

German LNG demand

As Russian gas deliveries dwindle from Nord stream, German utilities are working to diversify gas import portfolios and build up the limited import capacity for LNG.

Uniper, RWE and EnBW on Aug. 16 signed a memorandum of understanding for gas supplies into the Wilhelmshaven and Brunsbuttel floating storage and regasification units, which are set to start operations this winter with a capacity of 12.5 Bcm/year.

Germany is developing a total of five state-backed FSRU projects, but the focus is initially on supplying LNG into the Wilhelmshaven and Brunsbuttel sites.

The FSRUs in Brunsbuttel and Wilhelmshaven are to be operated by RWE and Uniper.

The reduction in Russian flows to Germany via Nord Stream since mid-June and then the complete halt in deliveries at the end of August have helped keep European gas prices at sustained highs.

Platts, part of S&P Global Commodity Insights, assessed the Dutch TTF month-ahead price at an all-time high of Eur319.98/MWh on Aug. 26. It was last assessed on Sept. 23 Eur179.20/MWh, almost three times higher than at the end of 2021.

Oil products supply

Before Russia's invasion of Ukraine in February, Germany was the world's second-biggest buyer of Russian crude after China, importing 687,000 b/d of crude and 149,000 b/d of oil products from Russia in November 2021, according to the International Energy Agency. Most of the crude was delivered via the northern branch of the Druzhba pipeline system from Russia, with smaller amounts arriving via tanker to Rotterdam and its North Sea ports of Wilhelmshaven and Brunsbuttel. Germany had already seen most of its refiners and oil importers switch away from Russian supplies since March. By mid-April, the government said the country had slashed its dependence on Russian crude to 12% of its imports from 35% before the invasion of Ukraine.

The UAE energy producer has also signed agreements with German customers, including power plant operator Steag and copper producer Aurubis for the supply of low-carbon ammonia.

The first cargo of low-carbon ammonia from ADNOC arrived in Germany Sept. 15 on its way to Aurubis, which will use the low-carbon ammonia as a feedstock in its wire rod plant.

The demonstration cargo, produced by Fertiglobe, an ADNOC unit that produces fertilizers, is the first of several test cargoes to be sent from the UAE to Germany as the UAE energy producer expands its strategic energy partnership.

Low-carbon ammonia delivery

ADNOC plans to work with several German companies on hydrogen projects and signed deals with companies including Uniper, Aurubis and RWE as it looks to expand into Europe after having establishing export markets in Asia.

ADNOC signed an agreement with German companies Hydrogenious and Uniper on March 21 on imports to Wilhelmshaven, covering 7,000-10,000 mt/year of green hydrogen shipments from 2025, as part of a demonstration project.

ADNOC aims to supply up to 25% of Germany's imported clean hydrogen and derivatives such as ammonia.

The UAE is also targeting a 25% share of the global green and blue hydrogen market by 2030.

As part of agreements signed on Sept. 25, UAE's renewable energy firm Masdar will also explore opportunities to develop as much as 10 GW in offshore wind in the North Sea and Baltic Sea in Germany by 2030, WAM said.