Can Qatar step in as a supplier of natural gas?

As of: 01/28/2022 4:23 p.m

The natural gas storage facilities are unusually low in the middle of winter, and the Ukraine conflict is increasing fears of a Russian supply freeze. Apparently, not only the USA offers support.

In view of the low filling of the German natural gas storage facilities and the ongoing conflict between Russia and Ukraine, politicians are apparently working on alternative procurement options for the important raw material.

According to a report by the “Handelsblatt” there are talks between the USA and Qatar about how Europe could be supplied with more natural gas from the emirate. The Emir of Qatar, Sheikh Tamim Al Thani, will soon travel to Washington at the invitation of US President Joe Biden.

Apparently there is also contact with the German side. In a telephone call at the beginning of November, the Emir had already promised the then Chancellor Angela Merkel that he would help to ensure Germany’s energy security. Qatar sees itself as a “sincere partner of Germany”. Qatar’s state-owned energy company, Qatar Petroleum, is ready to help build and finance a German liquefied natural gas terminal on the Elbe.

No own LNG terminal

So far, Germany has not had its own terminal where liquefied natural gas could be landed. Instead, the required quantities have to be imported via terminals in Italy, the Netherlands and Poland, for example, and then fed into the European gas network. After all, the utilization of the systems was only around 30 percent recently. Significantly more gas could come to Europe this way.

The background to the talks seems to be the realization that the European market cannot be supplied with natural gas supplies from the USA alone. Germany obtains around 55 percent of its natural gas from Russia. Accordingly, Germany is dependent on deliveries from the state-owned company Gazprom through the various pipelines. Many experts interpret the recently unusually low deliveries as a means of exerting pressure on Germany and the EU in the Russian conflict with Ukraine.

Qatar is only the fifth largest natural gas producer in the world. Number one is the USA, followed by Russia. However, the emirate is the world market leader when it comes to LNG (liquefied natural gas). So far, Qatar and the USA have primarily supplied customers in Asia.

Lots of gas for Europe from the USA

In December, European countries were the main buyers of American gas. About half of US exports went to Europe. While rising demand in Asia and Europe has pushed prices to record highs, supply in the US exceeds domestic consumption by about 10 percent due to the production of shale oil and gas. However, the capacity for cooling natural gas to LNG in the US is limited. In December it was close to maximum utilization.

Liquefied natural gas is used when there is no pipeline connection between producer and consumer. Natural gas becomes liquid when it is cooled down to minus 164 degrees – which also causes the volume to shrink significantly. LNG is traded significantly more expensive than pipeline gas.

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