Germany and Oman are in advanced talks to strike a long-term deal for liquefied natural gas (LNG) lasting at least ten years as Berlin seeks alternatives to Russian fuel supply, according to three sources familiar with the matter.
Since last year, Europe has been trying to replace Russian gas against the backdrop of Russia-Ukraine war, with state-run Gazprom (GAZP.MM) gradually lowering and finally stopping the lion's share of pipeline shipments to Europe.
Last September, Germany's energy company RWE signed an LNG contract with the UAE's ADNOC, while Germany has been looking for other sources through utility companies Uniper and Sefe.
The agreement with Oman will be for 0.5-1 million tonnes per annum (mtpa), according to two sources with firsthand knowledge of the matter, with one specifying around 0.8 mtpa over the 10-year term.
A third source involved with the negotiations also said a 10-year agreement was being discussed.
According to two sources, Uniper was involved in the negotiations. 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.
Europe's largest economy intends to replace all Russian energy imports by mid-2024, a significant undertaking for a country that relies heavily on natural gas to power its industry.
Germany has been in talks for months with Qatar, the world's largest LNG producer, about extra supplies, but the talks have been drawn out. Doha seeks 20-years contracts, which contradict Berlin's climate goals.
QatarEnergy and ConocoPhillips signed two sales and purchase agreements last November to sell 2 million tonnes of LNG to Germany annually for at least 15 years starting 2026.
While supply agreements with Qatar would be beneficial to Germany, they would not provide an immediate solution to the country's energy crisis.