German utility giants eye massive LNG deal with Qatar

About a decade ago, Europe had a good idea: to pass a pipeline from natural gas-producing giant Qatar through Syria and Turkey to Europe, reducing or eliminating Europe’s dependence on Russian gas altogether. Then we have the entire Islamic State break that caught the world’s attention for several years, and which gradually faded as CIA funding dwindled after Putin and Assad proved too powerful for Western “liberators” to remove. And as quickly as ISIS disappeared, so too did Europe’s ambitions to build a gas pipeline from Qatar.

But while Qatar may not be sending gas by land, there is nothing stopping it from doing so by sea, and with Europe facing a historic energy crisis and desperately trying to literally try. anything, Overnight Reuters reported German service giants RWE and Uniper are close to concluding long-term deals to buy liquefied natural gas (LNG) – the type that doesn’t need a pipeline but does need a fairly expensive vessel to move it from the expensive LNG terminal to the expensive LNG terminal B, or in this case from the North Field Expansion Project in Qatar. why? Three sources from Reuters said it was simple: to help replace Russian gas.

While talks between Germany and Qatar are riddled with disagreements over key terms such as contract lengths and pricing – Reuters reported in May that talks have run into difficulties because Germany has been reluctant to commit to deals for at least 20 years and also wants to. Prices tied to Dutch benchmark gas prices, not oil – the industry told Reuters the two sides are expected to reach a compromise soon. One source said the talks are now more constructive than they were a few months ago. Another source said public utilities would likely agree to 15-year deals, while a third source said an agreement could be reached within weeks.In response to a request for comment, Uniper told Reuters on Monday it was still in talks with Qatar but had not reached an agreement. “Uniper is currently working hard to diversify its gas supply sources. Qatar also plays an important role in that,” she said. Likewise, RWE was similarly evasive and told Reuters it was in “good and constructive” talks with Qatar without elaborating.

Currently, the two facilities are buying LNG from Qatar on the spot market. RWE signed a deal with Qatar in 2016 for up to 1.1 million tons of LNG per year, but that expires next year.

German Chancellor Olaf Schulz will travel to Saudi Arabia on Saturday for a two-day visit to the Gulf region, which will take him to the United Arab Emirates and Qatar. Economy Minister Robert Habeck said Schulz is expected to sign LNG contracts during his visit to the UAE.

Europe’s largest economy has announced its ambitious goal of replacing all Russian energy imports by mid-2024, a miraculous effort for a country that relies primarily on natural gas to power its industry.

And while we applaud Germany finally realized that it had been a hostage to Russian energy all along—as Donald Trump warned it back in 2018 with a wry smile by Germans like Heiko Maas—there is a huge problem with the proposed push to replace dependence on Russia. With reliance on Qatar: Simply put, while supply deals with Qatar will be positive for Germany, They will not offer an imminent solution to the energy crisis in Berlin – or even a solution in the short term – As the extensive North Field expansion project is not expected to become operational before 2026.

The North Field expansion project includes six LNG trains that will increase Qatar’s liquefaction capacity from 77 million tons per year to 126 million tons per year by 2027. Qatar has partnered with international companies in the first and largest phase of the expansion, which is close to $30 billion American. It will strengthen its position as the world’s largest exporter of liquefied natural gas.

Of course, there’s another problem: As the recent unexplained incident at the Freeport LNG plant over the summer clearly demonstrated, the LNG transit is highly vulnerable to “weaker” choke points: if the Russian leader were so inclined, he could easily precipitate a handful of Explosions at key facilities in the process have crippled Qatar’s LNG exports for months, if not years, while sending Europe back to the Dark Ages…again.


More Top Reads from