Berlin, Brussels In mid-January, Federal Minister of Economics Robert Habeck (Greens) was still certain that his trips in office would take him to those regions of the world from which Germany can obtain green hydrogen on favorable terms. He will “support companies in concluding hydrogen supply contracts internationally,” he said in an interview with the Handelsblatt.
But with Russia’s attack on Ukraine, the signs have changed. Doubts about the reliability of Russia as a supplier of natural gas are growing, while at the same time there are demands from German politicians to take the initiative themselves and place an embargo on Russian natural gas.
Habeck’s interest is now focused on liquefied natural gas (LNG) from other regions of the world. LNG comes to European ports by tanker and can be fed from there into the European long-distance gas pipeline system and thus also made available in Germany.
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Habeck will travel to Qatar next weekend. Like the USA and Australia, Qatar is one of the major LNG exporters. But can the Qataris deliver at short notice? Andreas Goldthau, Professor of Public Policy at the University of Erfurt, is skeptical: “Qatar has sold 90 to 95 percent of its LNG production in the long term. This means that no more than ten percent of the quantities end up on the spot market and can be bought there at short notice.”
With Qatar’s annual production of a good 100 billion cubic meters (bcm), “we’re talking about ten bcm that are actually available,” says Goldthau. “You won’t get very far with that.”
Only limited alternatives
To put this in context: 60 bcm flowed through the Nord Stream 1 Baltic Sea pipeline alone last year. Germany’s annual gas consumption is around 90 bcm. How serious the situation is is made clear by an as yet unpublished study by the consulting firm E.Venture, which specializes in energy issues, on the situation on the gas market. “Dependence on Russian natural gas supplies is dramatically high. At the same time, the options for replacing Russian natural gas supplies with other suppliers in the short term are very limited,” says Felix Haslauer, head of E.Venture.
“Russian natural gas can be replaced by one third by reducing gas consumption and two thirds by natural gas from other suppliers. But that can’t be achieved by flipping a switch. Rather, it is a process that will be completed in the best-case scenario by 2030,” says Haslauer.
In 2021, 60 billion cubic meters of gas flowed through the Nord Stream 1 Baltic Sea pipeline alone. Germany’s annual gas consumption is around 90 billion cubic meters.
(Photo: dpa)
With regard to Qatar, Goldthau only sees relevant additional delivery volumes for Germany in the second half of the decade. Qatar has the potential and is also signaling a willingness to expand its production capacities, says Goldthau. But that cannot be done overnight. “Qatar will probably not be able to supply any significant additional LNG quantities until 2026. Ideally, at least part of this capacity should be contracted now,” advises Goldthau.
Germany is in a situation where you have to “collect every single cubic meter of natural gas from all over the world”. “Since only little LNG is freely available, you will have to buy out other customers.”
However, the industry doubts whether it will actually be possible to buy contractually guaranteed deliveries from other LNG customers. “The market is tight and other customers also have fat wallets. Therefore, the potential of such deals is very limited,” says a manager from the gas industry.
However, insiders report that Habeck will not return empty-handed from Qatar. In fact, behind-the-scenes talks are already underway between representatives of the federal government and Qatari officials. The Qatari Deputy Prime Minister and Foreign Minister Mohammed bin Abdulrahman Al-Thani came to Berlin last week unannounced
Foreign Minister Annalena Baerbock and Jörg Kukies, the Chancellor’s economic adviser. The Qataris are also repeatedly mentioned as potential investors for an LNG terminal in Germany.
Qataris could expect concessions on regulation
It is also conceivable that the Qataris expect concessions on regulation. In recent years, the Europeans have repeatedly opposed the Qataris’ practice of concluding long-term contracts and linking them to a territorial reservation: these clauses prohibit LNG buyers from reselling the LNG to other countries.
The rule violates the principles of the EU internal market. “The Europeans must make it clear whether they want to stick to their position,” said Goldthau.
Iran could come back into play
In the wake of the supply crisis, Iran could also get back into business. In any case, Iran’s Foreign Minister Hossein Amir-Abdollahian was in Berlin on Wednesday – also not publicly communicated, as the Handelsblatt learned.
Tehran wants the West to help unblock the Russian blockade on the Iran nuclear deal. Moscow is torpedoing the nuclear deal, which the Kremlin had repeatedly defended against then-US President Donald Trump, with alleged concerns about trade restrictions due to Western sanctions.
The reason: Russia does not want Iran to be able to export oil again quickly. Trump’s sanctions made this largely impossible for him. Now Iran is needed to bring quantities of oil to market that would help replace a Russian boycott.
However, Europeans are also looking west. Four days after the Russians invaded Ukraine, Habeck traveled to Washington – also to talk to the Americans about LNG.
Liquefied natural gas comes to European ports by tanker, from where it can be fed into the European long-distance gas pipeline system and thus made available in Germany.
(Photo: Reuters)
But the scope of the US gas industry is limited, says Jacopo Pepe from the Stiftung Wissenschaft und Politik (SWP): “The US will not increase its LNG exports within the next two years because there is a lack of terminal capacity. These capacities have yet to be expanded.”
In the short term, the US cannot save the situation, only help to keep the supply gap from becoming too large. In the medium term, however, there are opportunities. North Dakota’s Department of Commerce sent a strategy paper to the German Embassy in Washington on March 7 in hopes of forging an energy partnership with the Federal Republic. The US state is one of the most important locations for the American fracking industry.
The state government of North Dakota sees a win-win situation: North Dakota must find buyers for natural gas, the European allies have signaled “that they have to get rid of Russian oil and gas,” says the strategy paper available to Handelsblatt.
The necessary infrastructure is missing in North Dakota
So far, the necessary infrastructure has been lacking. North Dakota’s Secretary of Commerce James Leiman promises in an interview with the Handelsblatt: “There is capacity in the pipeline network that we can use in the short term – to build a comprehensive partnership on this basis.” According to Leiman, North Dakota could have around 12.7 export bcm natural gas per year.
Efforts are also being made at European level to reduce dependence on Russian gas supplies. The EU Commission wants to design the framework for “joint procurement” in order to build up “strategic reserves”.
The plans are part of the EU Commission’s “RePower EU”‧ concept. The Commission presented the draft law required for this in December, and it must now be brought into line with the ideas of the Member States and Parliament. However, the planned rules for joint procurement are voluntary – energy policy is a matter for the member states.
The problem is that the individual gas markets are organized very differently. In Germany, for example, the purchasing decisions are not made by the state or state-owned company, but by private companies. It is conceivable that the companies will conclude cross-border purchasing alliances in the future. But the time factor also plays a decisive role here: it can hardly be arranged in the short term.
More: What natural gas is used for in Germany. An overview.