Germany, Qatar at Odds Over Terms in Talks on LNG Supply Deal -Sources

Date: 11 May 2022 - 21:49

News ID: ۱۰۲۴۵۵

LONDON (Rutgers) - Germany and Qatar have hit difficulties in talks over long-term liquefied natural gas (LNG) supply deals amid differences over key conditions, including the duration of any contract, three people familiar with the discussions told Reuters.
Germany, which aims to cut its carbon emissions by 88 per cent by 2040, is reluctant to commit to Qatar’s conditions to sign deals of at least 20 years to secure the massive LNG volumes it needs to reduce its dependence on Russian gas, the people said.
Qatar, the world’s largest LNG supplier, is also specifying terms, such as a destination clause that would prevent Berlin from re-routing the gas to other areas in Europe, a condition which the European Union opposes.
The tough talks between Qatar Energy and German utilities highlight the challenges the EU faces in its ambition to diversify away from Russian gas, as the German government struggles to balance any deal with its carbon reduction targets.
Germany consumes around 100 billion cubic meters (bcm) of natural gas annually, with around 55 per cent of that coming from Russia and smaller volumes piped from Netherlands and Norway.
It has backed the construction of two LNG terminals and has rented four floating storage and regasification units (FSRUs) as a stop-gap measure.
What it needs now is the actual LNG.
“The issue of LNG contract length potentially putting Germany’s decarbonisation targets at risk is part of the ongoing discussions with Qatar,” one of the people said, adding Germany was also competing with other nations for LNG from Qatar.
Another source said that securing LNG supplies form Qatar “is not expected to happen soon”.
Qatar’s government communication office declined to comment on ongoing negotiations. Germany’s Economy Minister was not immediately available for comment.
Qatar is also firm on oil-indexation, linking the contracts to oil price, which represents the pricing structure of their alternative sales into Asia, while the Germans are seeking linkage to the Dutch TTF benchmark, Felix Booth, Head of LNG at energy intelligence firm, Vortexa, said.
“Qatar is in the driving seat in these discussions, with a new project under way, strong interest in their volumes and a long history as a reliable supplier,” Booth said.