This weekend German Chancellor Olaf Schulz will visit three countries in the Gulf – Saudi Arabia, the Emirates and Qatar – a visit designed to ensure the energy future of his country in the coming years.
Before the visit, it was reported that two German companies, Unifer and RWE, are close to concluding a long-term gas agreement with Qatar. Although no further details were given, this is a rather surprising turn of events, since several months ago the German Economy Minister Robert Hoback traveled to Doha and met with senior Qatari officials in order to promote a gas deal. However, a few weeks ago it was reported that the negotiations ran aground due to the conditions set by the Qataris, chief among them a ban on Germany selling gas from Qatar to other European countries. This condition was a red line for the European Union until the war in Ukraine, and therefore Qatar’s emphasis was directed to other markets. Following the insistence Qatar, it was reported a few weeks ago that the Germans are looking for other alternatives.
It is not clear what caused the progress in the negotiations and who blinked first, but it must be made clear that even if the agreements are signed, it will not save the German energy economy this winter and probably not in the two that follow. Qatar is investing tens of billions of dollars in expanding its gas production capacity from 77 million tons per year to 110 million, but the project is not expected to start flowing additional quantities of gas before 2026.
In the immediate term, its maneuverability to help Germany is quite limited, this is in view of the fact that it is bound by long-term contracts with clients in Asia, with an emphasis on China. The Emir of Qatar, Sheikh Tamim bin Hamad al-Thani, also said these things openly last week in an interview with a French magazine, when he clarified that his country is interested in helping Europe, but cannot serve as a substitute for Russian gas in the near term.
In terms of numbers, Qatar was right. Germany consumes about 100 billion cubic meters of natural gas per year, about half of which came from Russia, but Qatar currently does not have a free amount that can meet all the needs of the German market. In addition, there is a technical problem with the supply, since Germany does not have terminals for importing liquefied natural gas, but only Pipelines The Germans are working on building two terminals and at the same time promoting the idea of using gasification ships (FSRU).
Also at Schultz’s second station in the Gulf, the Emirates, he will sign gas supply agreements whose implementation can only begin in a few years. The National Oil Company of Abu Dhabi (ADNOCH) is currently in the midst of a grandiose investment plan worth 127 billion dollars to develop its gas and oil reserves in the years until 2026. A central goal of this investment plan is to double the natural gas production capacity from 6 million tons per year to 12 one million. Currently, all gas customers from the Emirates are in Asia, with an emphasis on Japan, so the expansion of output will also allow sales to the German market.