About a decade ago, Europe had a bright idea: run a pipeline from natgas-producing giant Qatar through Syria, Turkey and into Europe to reduce or eliminate Europe’s dependence on Russian gas altogether. We then get the entire staged ISIS interlude that captured world attention for several years, and which gradually faded as CIA funding dwindled after Putin and Assad proved too powerful to be ignored by Western “liberators.” to be removed. And as quickly as IS disappeared, so did European ambitions for a Natgas pipeline from Qatar.
But while Qatar is not allowed to send gas by land, there is nothing preventing it from doing so by sea, and as Europe faces a historic energy crisis it is desperate to literally try anything, over night Reuters reported that the German energy groups RWE and Uniper are about to sign long-term purchase agreements liquefied natural gas (LNG) – the kind that doesn’t need a pipeline but needs a fairly expensive ship to transport it from the expensive LNG Terminal A to the expensive LNG Terminal B, or in this case from the North Field Expansion project in Qatar. Why? Simple: To replace Russian gas, three Reuters sources said.
While talks between Germany and Qatar have been marred by disagreements over key terms such as contract length and pricing, Reuters reported in May that the talks had run into trouble because Germany had not wanted to commit to any deals for at least 20 years, and it did not want to price the pegged to benchmark Dutch gas prices rather than oil prices – the industry told Reuters the parties are expected to reach a compromise soon; One of the sources said the talks are now more constructive than they were a few months ago. Another source said the utilities were likely to agree 15-year contracts, while a third source said a deal could be reached within weeks.Asked for comment, Uniper told Reuters on Monday that it remained 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 this,” it said. RWE was similarly evasive, telling Reuters it was in “good and constructive” talks with Qatar, without being more specific.
The two energy suppliers are currently buying LNG from Qatar on the spot market. RWE signed a contract with Qatar for up to 1.1 million tons of LNG per year in 2016, but this expires next year.
Chancellor Olaf Scholz travels to Saudi Arabia on Saturday for a two-day visit to the Gulf region, which will also take him to the United Arab Emirates and Qatar. Scholz is expected to sign LNG contracts during his visit to the UAE, Economy Minister Robert Habeck said.
Europe’s largest economy has announced its ambitious goal of replacing all Russian energy imports by mid-2024, a Herculean effort for a country that relies mostly on natural gas to power its industry.
And while we applaud Germany for finally realizing it has been held hostage by Russian energy all along — as Donald Trump warned it back in 2018 against a sarcastic smile from Germans like Heiko Maas, there is a major catch to the proposed push to replace dependency on Russia with dependency on Qatar: Put simply, while supply deals with Qatar would be positive for Germany, they would not offer an immediate solution to the Berlin energy crisis – or even a short-term solution – as the huge North Field Expansion project is not expected to come online until 2026.
The North Field Expansion project includes six LNG trains that will increase Qatar’s liquefaction capacity from 77 million tonnes per year (mtpa) to 126 mtpa by 2027. Qatar has partnered with international companies in the first and largest phase of the nearly $30 billion expansion that will cement its position as the world’s largest LNG exporter.
Of course, there’s another catch: as the recent unexplained accident at Freeport’s LNG plant over the summer vividly demonstrated, LNG transit is extremely vulnerable to shortages at its “weakest link”: if the Russian leader were so inclined , he could easily unleash a handful of explosions at key facilities that crippled Qatar’s LNG exports for months, if not years, while Europe was thrown back into the Dark Ages…again.
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