(Bloomberg) -- Qatar has agreed to supply Germany with liquefied natural gas under a long-term deal that will go a small way to helping the European country replace piped flows from Russia.
State-owned Qatar Energy and ConocoPhillips have signed agreements that will see the Persian Gulf state send up to 2 million tons of LNG a year to Germany from 2026. The deals will last at least 15 years, Qatar’s energy minister, Saad al Kaabi, told reporters in Doha alongside Ryan Lance, ConocoPhillips’ chief executive offer.
Germany has been one of the worst hit European nations after a reduction in supplies of gas from Moscow. The nation which used to get more than a half of its gas via pipelines from Russia, has rented several floating LNG terminals which it will rely on in future. Closing a deal now means further diversification of LNG sources, key for Germany to go through this and next winter.
The deal with Qatar is only 6% of the 46 billion cubic meters of Russian gas Germany imported in 2021. But signing an agreement is significant as the global LNG market is increasingly competitive, with Europe fighting over cargoes with Asia during the winter.
Germany has been locked in negotiations with the Qataris for additional supplies it desperately needs to keep its industrial plants operating, homes heated and lights on. It’s a sign that Berlin may be softening on its opposition to longer contracts of as much as 25 years that would contradict its goal to be climate-neutral by 2045.
“I also wouldn’t be opposed to 20-year or even longer contracts,” Robert Habeck, Germany’s economy minister said at an industry conference on Tuesday. “The companies should just be aware that the buying side in Germany will become smaller, if we want to keep the climate goals.”
Qatar is continuing to talk to German buyers about additional supplies, Qatar’s energy minister, Saad al Kaabi said. He previously said Qatar is in talks with Germany’s RWE and Uniper SE about long-term LNG contracts.
The gas will come from ConocoPhillips’ joint ventures in Qatar and will be delivered to the Brunsbuttel floating import terminal that’s under construction.
The five import facilities chartered by the German government will cost a total of €6.5 billion ($6.7 billion) over the next 10 to 15 years. There is also one privately chartered terminal planned. Once operational, they will be able to cover around one third of Germany’s current gas demand, according to a government estimate.
--With assistance from Arne Delfs.
(Adds German government comment in sixth paragraph.)
©2022 Bloomberg L.P.