Economy

Qatar multiplies long-term gas contracts

The organizer of the current Football World Cup is definitely on all fronts. Qatar announced on Tuesday, November 29, an agreement with Germany to supply it, from 2026, “up to 2 million tonnes of LNG per year”or 2.7 billion cubic meters, for at least fifteen years old. This liquefied natural gas will arrive by ship at the terminal which is under construction in Brunsbütell, in the north of the country. The American company ConocoPhillips was responsible for the supply.

The Germans want to secure their supplies

The discussions were long and uncertain until the end, according to the German press. Qatar wanted to enter into a 25-year agreement, in order to have more visibility and recoup more quickly the huge investments it is making to increase its production. A liquefaction plant alone costs around thirty billion euros!

But the Germans did not want to commit to such a long period, stuck with their goals of reducing their carbon footprint. Even if it means paying more for gas in exchange for a shorter duration.

Because Germany seeks at all costs to secure its supplies to compensate for the stoppage of deliveries from Russia, which supplied it with half of its gas, before the war in Ukraine. This is also the reason why Chancellor Olaf Scholz is opposed to any gas price cap, as suggested by the European Commission and certain countries including France.

Qatar to increase production by half

The volumes contracted with Qatar should represent approximately 3% of German consumption. This is the first LNG supply agreement signed by Berlin, since the country decided, as a matter of urgency, to build seven liquefaction terminals, the first of which has just been inaugurated in Wilhelmshaven.

This contract with Germany also allows the emirate to diversify its client portfolio, three out of four of which are now Asian. He must act quickly, even if gas demand today exceeds supply. But new capacities will come on the market.

The emirate, which is already one of the world’s leading producers of LNG, intends to increase its production by more than 60% by 2027, to reach 126 million tonnes per year. The gas planned for Germany will thus come from the North Field South and North Field East fields, developed by ConocoPhillips, TotalEnergies and Shell, present alongside Qatar Energy.

Twenty-seven-year contract with China

With its gigantic reserves, Qatar is in any case very courted and can today negotiate more attractive conditions than those signed in recent years, when short-term sales have multiplied. It’s the opposite way today. A few days ago, Qatar signed a contract with China for 4 million tonnes of LNG per year, for twenty-seven years, a record duration.

The Chinese are even ready to go even further. They officially asked to take shares in North Field South, like Western companies. It is one of the largest deposits in the world, located under the Persian Gulf and shared with Iran.

Source : BBN NEWS

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