HOUSTON, Texas: QatarEnergy and ConocoPhillips have signed two sales and purchase export agreements covering at least a 15-year period, which will provide Germany with new flows of Qatari liquefied natural gas (LNG) beginning in 2026.
Competition for LNG has become intense since Russia invaded Ukraine in February, with Europe requiring large amounts to help replace Russian gas, which previously made up some 40 percent of imports.
In a joint news conference with ConocoPhillips CEO Ryan Lance, QatarEnergy's chief executive Saad al-Kaabi said that the first of its kind deal will provide Germany with 2 million tonnes of LNG per year.
"(The agreements) mark the first ever long-term LNG supply agreement to Germany, with a supply period that extends for at least 15 years, thus contributing to Germany's long-term energy security," al-Kaabi said, as reported by Reuters.
Germany, Europe's largest economy, which mainly relies on natural gas to power its industry, aims to replace all Russian energy imports by mid-2024. It would require some 40 million tonnes of LNG to replace the 50 billion cubic meters (bcm) of pipeline gas it previously received from Moscow. Its gas consumption in 2021 was around 88 bcm.
"By 2027, we think Germany's gas consumption would be around 73 bcm a year, so this deal could cover around 3.7 percent of that. This is not an inconsequential volume and is a big step in diversifying supplies," said Kaushal Ramesh, analyst at Rystad Energy, according to Reuters.
This week, German Economy Minister Robert Habeck said the 15-year term of the deal was "great."
ICIS head of energy analytics Andreas Schroeder said the starting date of 2026 was late, as Germany needed LNG for 2023 and 2024, stating, "If German players do not secure sufficient volumes at an OK price for 2023, they will have to revert to spot LNG markets, and expose themselves to global price volatility," as quoted by Reuters.
Talks were still taking place with other German companies for additional gas supplies, al-Kaabi said.
Asked whether some German politicians' criticism of Qatar hosting the soccer World Cup had any impact on talks, al-Kaabi stressed that QatarEnergy separates politics and business.