Qatar announced a major gas contract for the supply of Germany

The Qatari gas carrier Duhail crosses the Suez Canal near the Egyptian port city of Ismailia. AFP file photo

Qatar yesterday announced a major deal to supply Germany with liquefied natural gas (LNG) for 15 years amid the global energy crisis caused by the war in Ukraine. The agreement between Qatar Energy and US company ConocoPhillips will contribute to “efforts to support energy security in Germany and Europe,” Qatar Energy Minister Saad Sherida Al-Kaabi said at a signing ceremony in Doha.

Under the terms of this agreement, the Gulf state will supply “up to 2 million tons of LNG per year” from 2026 to the gas terminal under construction in Brunsbütel in northern Germany, the minister said. The deliveries will be made for “at least 15 years” by ConocoPhillips, Qatar Energy’s partner in developing the North Field offshore field, the world’s largest natural gas field that Qatar shares with Iran. The contract is a “vital contribution to global energy security,” said US company CEO Ryan Lance.

European countries have been seeking alternatives to Russian gas since Russia’s invasion of Ukraine last February. But talks with Qatar have been difficult as Germany and other countries have refused to sign long-term agreements identical to those linking the Gulf state to its main Asian clients.

Last week, Qatar struck a record 27-year deal with China covering 4 million tons per year. Qatari officials did not touch upon the issue of pricing, but the relatively short duration and terms of the contract with Germany should be associated with a premium, market experts say.

Intensive Discussions

Saad Sherida al-Kaabi claimed that Qatar Energy was in talks with German companies to increase “volumes” supplied by his country. The gas that will be supplied to Germany from 2026 will come from the North Field South and North Field East fields, developed jointly with Western energy giants, including France’s TotalEnergies and Britain’s Shell. Qatar, which is already one of the world’s major producers of liquefied natural gas, has set itself the goal of increasing its production by more than 60% by 2027, to 126 million tons per year. Export revenues almost doubled last year due to rising global prices, according to state media.

Asia (leaded by China, Japan and South Korea) is the main market for Qatari gas, but Europeans are increasingly courting this country. “There are very intense negotiations going on with European and Asian buyers,” Saad Sherida al-Kaabi said, highlighting the “gas shortage in the coming years.” “We do not have enough teams to work with everyone, to satisfy all needs. According to him, the agreement reached with China shows that “Asian buyers are under pressure to enter into long-term agreements.”

The Brunsbuttel terminal serves customers of the German energy companies Uniper and RWE. According to German Minister Robert Habeck, these companies source their supplies from the global market and choose “the best deals for consumers on the global market.” “But Qatar is not the only supplier in the market,” he added. According to Bill Farren Price of research firm Enverus, the agreement highlights the importance and “key role that Qatari LNG will play in filling the gap created by the de facto halt to Russian gas exports to Europe.”

Tim WITCHER/AFP

Source: L Orient Le Jour

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