Merkel visit leads to $1.25bn deals

UAE and German companies have signed energy and petrochemicals deals worth at least Dh4.6 billion (US$1.25bn) and proposed a new gasfield development during a two-day visit to Abu Dhabi by Angela Merkel, the German chancellor. Mrs Merkel, who last visited the UAE in 2007, called for increased bilateral trade between the two countries in sectors including energy, chemicals, transport and tourism.

Germany is the UAE's fifth-largest trade partner and the largest from continental Europe. "The UAE is the most important economic partner for us in the region," Mrs Merkel told a meeting of the UAE-Germany joint economic committee in the capital yesterday. "We know we're not the only partner of the UAE, which requires of us greater and greater efforts," she said. On Monday, the Abu Dhabi plastics maker Borouge finalised the awarding of a $1.07bn contract to the German engineering and industrial gases group Linde.

Linde will build an "ethane cracker" at Ruwais, the industrial complex on Abu Dhabi's coast, for converting up to 1.5 million tonnes a year of natural gas feedstock into ethene, a gas from which polythene plastics are made. Borouge, a joint venture between Abu Dhabi National Oil Company (ADNOC) and the Vienna-based chemicals producer Borealis, is seeking to expand the annual capacity of its production site at Ruwais to 4 million tonnes of plastics by 2014 from 600,000 tonnes.

Separately yesterday, ADNOC and Wintershall, the biggest German oil and gas producer, signed a memorandum of understanding on "possible joint exploration and development" of an Abu Dhabi gas and condensate deposit. "The joint declaration of intent is an important step on the path towards possible long-term co-operation opportunities in the energy sector between Germany and the emirate of Abu Dhabi," Wintershall said.

On the sidelines of yesterday's economic meeting, a senior manager of Wintershall said the gas deposit was not the Shah gasfield, for which ADNOC has been seeking a development partner after the US company ConocoPhillips quit the challenging $10bn sour-gas project last month. The manager did not rule out the smaller Hail offshore gasfield, which ADNOC had previously said it planned to develop. Wintershall opened an Abu Dhabi office two months ago. The company is offering to share advanced technology to boost oil and gas recovery from "complex reservoirs".

It is one of several European oil companies that are seeking to establish a foothold in Abu Dhabi as the concessions for most of the emirate's biggest oilfields approach expiry in 2014 and 2018. The German industrial and engineering group Siemens said yesterday it had received a ?150 million (Dh675.1m) order from the operator of Abu Dhabi's power grid, the Government-owned Abu Dhabi Transmission and Despatch Company, for expansion of the emirate's electricity distribution network.

Germany's bilateral trade with the UAE peaked at $8.4bn in 2008, falling to $6.3bn last year because of the recession. "By the next time I come here, I want this to have increased," Mrs Merkel said. The German chancellor was at the start of a tour of Gulf states with her next scheduled stop being Saudi Arabia. "The region is interesting for everything that concerns infrastructure, the energy sector and increasingly the chemical industry," Mrs Merkel said.

While in the capital, she also discussed the euro crisis and the controversy over Iran's nuclear programme. "Gulf countries and in particular the UAE play an important role in the peace process in the Middle East and, of course, in relation to Iran," Mrs Merkel said. Dr Bernd Pfaffenbach, the state secretary of the German ministry of economics and technology, said the stability of the euro was "essential".

The currency has fallen sharply in recent weeks amid concerns that EU efforts to contain the Greek debt crisis could drag Europe back into recession. * additional reporting by Uta Harnischfeger tcarlisle@thenational.ae