Dusseldorf, Berlin Qatar is now supplying liquefied natural gas (LNG) to Germany. Qatari Energy Minister Saad Sharida al-Kaabie announced this in Doha on Tuesday. The LNG is to be sold by the state-owned company Qatar Energy to the US company Conoco Phillips, which will then deliver it to the German LNG terminal Brunsbüttel, the minister said. Conoco Phillips is a partner in the Qatari state-owned company alongside Shell, Exxon Mobil, Total Energies and Eni.
Deliveries are scheduled to begin in 2026 and run for up to 15 years. Up to two million tons of liquefied natural gas are to be delivered annually. Qatar Energy declined to comment on the price. There would be further talks about LNG deliveries with German companies.
Federal Minister of Economics Robert Habeck (Greens) traveled to Qatar in the spring to promote LNG deliveries. Members of the business delegation that accompanied the minister were RWE boss Markus Krebber, VNG boss Ulf Heitmüller and managers of the Uniper group.
At an industry conference in Berlin on Tuesday, shortly after the deal became known, Habeck made it clear: “The political talks in Qatar were just general talks. After that, the companies that concluded their contracts themselves remained in negotiations.”
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It is not the task of the state to buy gas and infrastructure. “We have contracts with RWE and Uniper for the LNG terminal in Brunsbüttel. These companies buy on the world market, not us,” said the Green politician. The companies take advantage of various offers, including Qatar, “but it is not the only provider on the market”.
The deal comes just days after Qatar and China announced a massive supply deal spanning 27 years. It provides for the export of 108 million tons of liquefied natural gas (LNG) over 27 years.
Liquefied gas from Qatar: The delivery volume of LNG is quite small
For Germany, the 15-year deal with Qatar is the first long-term supply contract for LNG. The two million tons of LNG correspond to around 2.7 billion cubic meters of natural gas per year – so the delivery volume is quite small. For comparison: in 2021 Germany consumed almost 90.5 billion cubic meters of natural gas. By the time war broke out between Russia and Ukraine, around 55 billion cubic meters had been sent annually from Russia to Germany through the Nord Stream 1 Baltic Sea pipeline. However, part of the 55 billion cubic meters was forwarded to other European countries via the European long-distance gas pipeline network.
In view of the climate targets, the federal government is actually in favor of only concluding short-term gas supply contracts. Habeck emphasized on Tuesday that the companies acted independently on the world market. “But it is clear that gas consumption will have to go down in the foreseeable future,” said the minister. After all, Germany has set itself the goal of being climate-neutral by 2045.
With a view to the term of the deal that has now become known, Habeck said: “15 years are great. But I wouldn’t have anything against longer terms either.” However, the contractual partners must be aware that demand in Germany is falling. The companies would then have to resell quantities that would later no longer be needed in this country. Habeck said the peak in gas consumption in Germany must be reached in the mid-2030s. It is therefore clear that companies that conclude contracts for the German market cannot enter into long-term contracts that exclude the resale of the gas.
Habeck was satisfied with the long term, but warned not to lose sight of climate neutrality.
(Photo: IMAGO/Political Moments)
The quest for contracts with shorter terms has so far made it difficult for German companies to negotiate with potential contractual partners such as Qatar. Because the LNG producers are very interested in long terms in order to be able to securely finance their billions in investments in the production of natural gas and in the liquefaction plants. “German companies have not yet dared to take risks and do not want to commit themselves in the long term,” observes gas expert Andreas Schröder from the market research company ICIS. That’s why the Americans from Conoco Phillips will jump into this gap from 2026.
>> Read also: How Europe redirects its gas flows – and becomes independent of Russia
“It is important that Germany also concludes contracts for 2023,” said Schröder. The energy groups RWE, Uniper and EnBW are in ongoing negotiations with both Qatar Energy and the oil and gas group Adnoc from Abu Dhabi.
The Abu Dhabi National Oil Company (Adnoc) has already signed an agreement for the first LNG deliveries with RWE for the terminal in Brunsbüttel.
RWE is negotiating with Abu Dhabi
However, this initially only applies to 137,000 cubic meters in December. For the multi-year delivery from next year there is initially only a declaration of intent. At the request of the Handelsblatt, RWE confirmed that discussions are still ongoing.
According to experts, however, fixed contracts are an important safeguard: “Otherwise Germany will have to buy everything from the spot market in 2023 and 2024, which can become volatile in terms of price,” warns Schröder.
Industry experts warn against euphoria in view of the contract now concluded with Qatar. The deal is “an important first step on a long journey,” said Timm Kehler, board member of the industry association Zukunft Gas. The contract should not be overrated, said Kehler. “Two million tons a year correspond to almost 30 terawatt hours and thus about three percent of Germany’s annual requirement. But we have to replace almost 500 terawatt hours that have so far been covered by Russian gas supplies,” he said. That means “that we still have a lot of work to do to secure the supply in the long term”.
The loss of Russian gas supplies has led to a dramatic increase in prices. Natural gas prices for the first quarter of 2023 have jumped to a level of 40 to 340 euros per megawatt hour (MWh) within the past twelve months. One MWh currently costs just over 130 euros.
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First publication: 29.11.2022, 09:30 a.m.