Qatar to supply gas to Germany as EU tries to ease dependence on Russia

Qatar to supply gas to Germany as EU tries to ease dependence on Russia

Qatar will supply liquefied natural gas (LNG) to Germany under a long-term agreement that marks a major step in Europe’s largest economy’s efforts to wean itself off its reliance on Russian gas.

Under two purchase and sale agreements signed on Tuesday (29) by state-owned QatarEnergy and US group ConocoPhillips, around 2 million tonnes of LNG will be shipped to Germany annually for at least 15 years, with deliveries expected to start from from 2026.

The deals are the first long-term pacts to supply LNG to an EU country since Russia’s invasion of Ukraine in February. Despite seeking substitutes for Russian gas, European countries fear closing such deals as they try to move away from fossil fuels.

Robert Habeck, Germany’s economy minister, welcomed the agreements. “Fifteen years is fine,” he said. “I wouldn’t have anything against 20-year or even longer contracts.”

Habeck said German utilities Uniper and RWE had been asked by the government to source gas on the international market – including from Qatar – for an LNG terminal being built on Germany’s North Sea coast.

He further explained that the signed contracts are between energy groups and utility companies in Germany. “The contracts themselves are business for the companies. [Elas] need to realize that Germany [no futuro] will buy less [gás] if we want to meet our climate goals”. In this case, the companies “will have to deliver the volumes they bought to other countries”.

The deals would contribute to Germany’s energy security “with a supply period extending over at least 15 years,” said Saad Sherida Al-Kaabi, Qatar’s energy minister and chief executive of QatarEnergy.

Al-Kaabi added that Qatar had separated “politics from business”, referring to an apparent protest by the Germany national team at the World Cup against FIFA’s decision to ban players from wearing “One Love” armbands, in support of the community. LGBTQIA+. The Germany team covered their mouths for a photo before their game against Japan last week.

Zongqiang Luo, a senior analyst at Rystad Energy, said the latest deals are “a sign that Europe is starting to tire of intermittent supplies from Russia and is increasingly looking for longer-term alternatives”.

The LNG will come from Qatar’s North Field East and North Field South projects, which aim to increase the Gulf country’s domestic LNG production from the current 77 million tonnes to 126 million tonnes by 2027.

Russian gas accounted for around 45% of EU gas imports last year. The bloc’s need to find substitutes has intensified competition with Asia for shipments, driving up prices.

The price of LNG delivered to northwest Europe rose to almost $80 per million British thermal units in August, more than four times the price a year earlier, according to data provider Argus Media. However, prices have since dropped back to last year’s level as Europe has managed to fill up its gas stocks.

While 2 million tonnes of LNG makes up about 3% of Germany’s annual gas demand, it will help fill the gap in a country that was one of the hardest hit when Russian President Vladimir Putin used energy supplies as a weapon. .

Russian gas accounted for more than half of Germany’s total supply before the invasion of Ukraine, and since then Berlin has struggled to build new LNG import infrastructure.

The country has recently completed construction of its first LNG import terminal in Wilhelmshaven in the North Sea, and has also chartered five floating storage and regasification units, used to store LNG and leave it in gaseous state.

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