Germany secures natural gas deal with the UAE as Berlin rushes to replace Russian supply before winter

• Germany signed a natural gas deal with the UAE on Sunday, as Europe scrambles to replace Russian supplies.
• The Abu Dhabi National Oil Co. will send a LNG cargo to German utility RWE by the end of December.

Germany signed a natural gas deal with the United Arab Emirates on Sunday, as the European country scrambles to find alternatives to cut-off Russian energy imports before winter kicks in.

Under the deal, German utility giant RWE will get liquefied natural gas from the Abu Dhabi National Oil Co. delivered to its new floating gas terminal near Hamburg. The shipment of 137,000 cubic meters of LNG is expected to arrive by the end of December, RWE said.

Germany has been racing to secure energy imports from nations other than Russia as Moscow slashes its gas flows to the region in response to Western sanctions over the Ukraine war. The cutbacks in supply have sent European natural gas prices soaring more than 300% this year and have forced Germany to turn to alternative and cheaper sources of fuel, like coal.

"This marks an important milestone in building up an LNG supply infrastructure in Germany and setting up a more diversified gas supply," RWE said about the agreement.

The Abu Dhabi National Oil Co. also made a multiyear commitment to deliver cargoes of LNG to Germany from 2023 onward, using both offshore and onshore re-gasification terminals as available.

European countries are increasingly turning to high-tech floating terminals to help in its energy crisis, as facilities on land top out. Germany has chartered five floating storage and regasification units, with energy giant Uniper investing around $65 million on projects.

"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," German chancellor Olaf Scholz said on his weekend visit to the UAE, per Reuters.

The UAE is not the only alternative supplier that Germany has approached. RWE and Uniper are nearing agreements on long-term deals to buy LNG from Qatar, but those deliveries wouldn't start until 2026.

Dutch TTF futures, Europe's benchmark natural gas price, were last down 6.2% to 173.99 euros per megawatt hour ($167) on Monday, as increased LNG supply eases pressure on Europe's situation.