Germany in advanced talks with Oman for natural gas supplies
Germany and Oman are in advanced talks to sign a long-term deal for liquefied natural gas (LNG) lasting at least 10 years as Berlin continues its search for alternatives to Russian fuel supplies, three sources familiar with the matter said.
Europe has been scrambling to replace Russian gas since last year against a backdrop of war in Ukraine, with state-run Gazprom (GAZP.MM) progressively reducing and then suspending the lion’s share of pipeline supplies to Europe. Energy firm RWE (RWEG.DE) in September secured an LNG deal with UAE’s ADNOC (ADNOC.UL), and Germany has been looking elsewhere through utility companies Uniper (UN01.DE) and Sefe, both of which were nationalised by Berlin last year. Two sources with direct knowledge of the matter said the deal with Oman would be for between 0.5-1 million tonnes per annum (mtpa), with one specifying around 0.8 mtpa over 10 years. A third source familiar with the talks also said a 10-year deal was being discussed. Two sources said Uniper was involved in the talks. The company was already in discussions with Oman over an ammonia deal, one of the sources said, after the group signed an agreement with Oman’s hydrogen project HYPORT Duqm in 2021 under which it is negotiating an offtake deal for green ammonia. Uniper and the Economy Ministry, which is in charge of the government’s ownership of Sefe, declined to comment. Sefe and Germany’s Finance Ministry, which manages Berlin’s holding in Uniper, did not immediately respond to requests for comment. Oman’s energy ministry also did not immediately respond to a comment request. Europe’s biggest economy hopes to replace all Russian energy imports by mid-2024, a major effort for a country that relies to a great extent on natural gas to power its industry. Germany has been holding talks for months with the world’s biggest LNG producer Qatar for additional supplies, but negotiations have been lengthy. Doha prefers 20-years contracts, which jar with Berlin’s climate goals. In November, QatarEnergy and ConocoPhillips (COP.N) signed two sales and purchase agreements to export 2 million tonnes of LNG annually to Germany for at least 15 years from 2026. While supply deals with Qatar would be positive for Germany, they would not offer an immediate solution to Berlin’s energy crisis. Our Standards: The Thomson Reuters Trust Principles.
Related Knowledge Center: Liquefied natural gas
Driven by plentiful natural gas produced from shale plays, the United States began exporting liquefied natural gas in 2016 when the Sabine Pass terminal in Louisiana opened and shipped its first cargo. Since then, additional capacity, or trains, have been added to Sabine Pass, and terminals have become operational in Cameron Parish, La.; Hackberry, La.; Cove Point, Md.; and Corpus Christi, Texas. The Energy Information Administration projects that U.S. LNG export capacity will reach 8.9 billion cubic feet per day (Bcf/d) by the end of 2019, making it the third largest in the world, behind Australia and Qatar. The tariff war with China has the potential to impact some final investment decisions for additional terminals in the coming months.
Related Knowledge Center: Energy security and pricing
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