Adnoc signs 15-year sales and purchase deal with Germany’s Sefe for Ruwais LNG project

Adnoc has signed the first long-term sales and purchase agreement with Germany's Sefe (Securing Energy for Europe) for its Ruwais liquefied natural gas project in Abu Dhabi, boosting the emirate’s status as an energy investment hub.

The state-owned oil major announced the 15-year, 1 million tonnes per annum agreement with Sefe's subsidiary, Sefe Marketing and Trading Singapore, at the Abu Dhabi International Petroleum Exhibition and Conference (Adipec) on Wednesday.

The financial value of the deal was not disclosed.

The LNG will primarily be sourced from the Ruwais project, with deliveries expected to start in 2028 once commercial operations begin, Adnoc said. More than 7 metric tonnes per annum of the Ruwais LNG project’s production capacity has been committed to international customers through long-term agreements to date.

Adnoc's Ruwais LNG project will comprise two 4.8 mtpa LNG liquefaction trains with a total capacity of 9.6 mtpa per annum, which will more than double Adnoc's existing LNG production capacity in the UAE to approximately 15 mtpa.

It is also set to be the first LNG export centres in the Middle East and Africa region to run on clean power, making it one of the lowest-carbon-intensity LNG plants in the world, according to Adnoc.

“As natural gas demand continues to increase, Adnoc is ensuring greater access to lower-carbon gas to power homes, fuel industries and keep people connected, and we will continue to reinforce our role as a reliable global supplier of natural gas,” Fatema Al Nuaimi, executive vice president for downstream business management at Adnoc, said.

Demand for LNG has increased in Europe since Russia invaded Ukraine in February 2022, as countries seek to diversify their energy sources and reduce dependence on Russian gas supplies.

Last year, Adnoc and German power company RWE announced the delivery of the first LNG shipment from the UAE to Germany.

Germany, the EU’s largest economy, plans to produce 80 per cent of its electricity using renewable energy sources by 2030.

However, Berlin is still reliant on fossil fuels for domestic power production.

Natural gas, crude oil and coal were collectively responsible for about 80 per cent of the country’s energy supply in 2022, the latest data from the International Energy Agency shows.

Sefe's partnership with Adnoc will help the former's efforts to “responsibly” diversify its energy sources, as well as enhance the security of energy supply for Germany and Europe, and help its customers with decarbonisation, said Egbert Laege, chief executive of Sefe.

“Furthermore, it is an important step for Sefe's ambition to drive the energy transition and become a European energy major in the low-carbon economy,” he said.

The sales and purchase agreement, announced on Wednesday, converts the previous initial agreement between Adnoc and Sefe in March into a definitive agreement.

The new Adnoc-Sefe agreement also builds on the UAE-Germany Energy Security and Industry Accelerator signed by the two countries in 2022, which aims to advance co-operation in energy security, decarbonisation and lower-carbon fuels.

Adnoc, which is responsible for almost all of the UAE’s oil production, is looking to position itself as a major player in the LNG market, as demand for the fuel is projected to grow over the next few decades.

In September, it signed a preliminary 15-year agreement with state-backed Indian Oil to supply 1 million tonnes a year of LNG to India and agreed to acquire a 35 per cent equity stake in US oil major ExxonMobil’s proposed blue hydrogen and ammonia production centre in Texas.

In May, Adnoc acquired an 11.7 per cent stake in phase one of NextDecade’s Rio Grande LNG export project in Texas, marking its first investment in the US.