Qatar is to provide Germany with liquefied natural gas under a long-term supply deal that marks a big step forward in efforts by Europe’s biggest economy to wean itself off Russian gas.
Under the two sales and purchase agreements signed on Tuesday by state-owned QatarEnergy and US group ConocoPhillips, about 2mn tonnes of LNG will be sent to Germany annually for at least 15 years, with deliveries expected to start from 2026.
The deals are the first long-term agreements for LNG supplies to an EU country since Russia’s invasion of Ukraine in February. European countries have been wary of striking such deals despite seeking substitutes for Russian pipeline gas, as they attempt to move away from fossil fuels.
Robert Habeck, Germany’s economy minister, welcomed the agreements. “Fifteen years is great,” he said. “I wouldn’t have anything against 20-year or even longer contracts.”
Habeck said that German utilities Uniper and RWE had been asked by the government to secure gas on the international market — including from Qatar — for an LNG terminal being built on Germany’s North Sea coast.
But noting that the contracts were between energy groups and Germany’s utilities rather than its government, Habeck warned: “The contracts themselves are the business of the companies . . . [they] have to realise that Germany will [in future] be purchasing less [gas] if we want to adhere to our climate goals.” In this event, the companies “will have to deliver the volumes they’ve bought to other countries”.
The agreements would contribute to Germany’s energy security “with a supply period that extends for at least 15 years”, said Saad Sherida Al-Kaabi, Qatar’s energy minister and chief executive of QatarEnergy.
Al-Kaabi added that Qatar separated “politics from business”, referring to an apparent protest by Germany’s World Cup squad against Fifa’s decision to ban players from wearing “One Love” armbands in support of the LGBT+ community, in which the team covered their mouths for a photo ahead of their game against Japan last week.
Zongqiang Luo, senior analyst at Rystad Energy, said the latest deals were “a sign that Europe is beginning to tire of Russia’s intermittent supply and is increasingly seeking long-term alternatives”.
The LNG will come from Qatar’s North Field East and North Field South projects, which aim to boost the Gulf state’s domestic LNG production to 126mn tonnes from the current 77mn tonnes by 2027.
Russian gas accounted for about 45 per cent of EU gas imports last year. The bloc’s need to find substitutes has intensified competition with Asia for cargoes, pushing up prices.
The price of LNG delivered to north-west Europe rose to nearly $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 fallen back to last year’s level as Europe managed to fill its gas stores.
While 2mn tonnes of LNG accounts for about 3 per cent of Germany’s annual gas demand, it will help fill the gap in a country that has been one of the worst hit as Russian president Vladimir Putin weaponised energy supplies.
Russian gas accounted for more than half of Germany’s total supplies before the invasion, and Berlin has since been striving to build new import infrastructure for LNG.
The country recently finished constructing its first LNG import terminal, at Wilhelmshaven on the North Sea, and has also chartered five floating storage and regasification units, used to store LNG and turn it back into gas.