Germany agrees 15-year liquid gas supply deal with Qatar

WORLD  03 December 2022 - 17:42

German firms have signed a 15-year deal to buy 2m tonnes of liquid gas from Qatar, sending out mixed signals over the priority Germany places on human rights in the Gulf and its commitment to a carbon neutral energy supply.

The deal was announced by state-owned Qatar Energy and deliveries will start from 2026.

The gas will be sold by Qatar to the US company ConocoPhillips, which will then deliver it to the LNG terminal in Brunsbüttel, Qatar’s energy minister said in the capital, Doha, according to The Guardian.

Germany has been one of the countries most critical at the World Cup of Qatar’s treatment of LGBTQ people, as well as the labour conditions of workers building the football stadiums. But the economics minister Robert Habeck, a Green party member, has also said that, faced with a need to wean itself off Russian gas supplies, Germany has to take its energy from a variety of sources.

Habeck visited Doha in March, but disputes over the length of the contract delayed an agreement, with Qatar preferring a 25-year contract and Germany seeking something much more short term. He said on Tuesday: “Fifteen years was great. They look like good conditions to me.”

Germany is building four temporary emergency floating LNG terminals to offload liquid gas. Imminent construction of permanent terminals has been snarled up in planning delays, but is now going ahead, broadening Germany’s ability to diversify its energy sources away from Russian pipelines.

Qatar’s gas will not arrive early enough to help Germany avoid energy shortages this winter and, potentially, the winter after. At present, Germany is confident it can avoid power outages this winter but is less confident that it will have the reserves to avoid power cuts or rationing in 2023-24.

The emirate’s sovereign wealth fund is helping to finance a major corporate takeover via an RWE convertible bond. As a result, Qatar will become the largest shareholder in RWE, the Essen-based energy giant, with nine per cent of its shares.

The relatively small size of the contract underlines Germany’s desire to meet its carbon neutral targets, including reaching carbon neutrality in 2045, four years after the Qatar contract is due to end.

Two million tonnes of liquid gas correspond to about 30 terawatt hours (TWh) or three per cent of annual German energy consumption. Before the Ukraine war, about 500TWh of gas were supplied from Russia alone every year.
Qatar is one of the world’s largest exporters of LNG. The emirate has the third largest gas reserves in the world after Russia and Iran. Qatar shares the world’s largest gas field with Iran, located off the country’s coast.

The vast majority of exports go to Asia, so far primarily to Japan, South Korea and India. Qatar wants to increase its LNG production by 60 per cent by 2027, producing 126m tonnes annually.

Caliber.Az