Can Qatar really replace Russia as Germany’s gas supplier?

0
29

Long before the re-emergence of the “pan-Arab” ideology now increasingly evident in several major Middle Eastern countries, Qatar had sought to follow its own path, without fully aligning itself with the state-led ruling bloc. United on one side nor on China. /Russia-head block each other. This partly reflects the hard facts that it shares the massive North Dome/South Pars natural gas reservoir with China/Russia’s main proxy in the region, Iran, and is geographically positioned directly between what was the main ally of the United States in the region. , Saudi Arabia to the west and Iran to the east. It’s also a function of autonomy nationalist sensibilities, and all of these factors combine in Qatar’s decision to cast itself as a key means by which Germany might finally consider enacting an oil and gas import ban. gas from Russia, encourage more European Union (EU) member states to do the same.

Just over a week ago, Qatar signed a declaration of intent on energy cooperation with Germany aimed at becoming the de facto The EU leader’s main liquefied natural gas (LNG) supplier is moving ahead. These new LNG supplies from Qatar would enter Germany through existing import routes complemented by new infrastructure approved by the German Bundestag on May 19. This includes the deployment of four floating LNG import facilities on its northern coast and two permanent land terminals, which are even currently under development, according to sources within the EU’s energy security apparatus. addressed exclusively Oilprice.com Last week. These plans, one of the sources said, will run in parallel with, but are likely to be completed much sooner than plans for Qatar to also make significant LNG supplies available to Germany from the Golden terminal. Pass on the Texas Gulf Coast, in which QatarEnergy has a 70% stake, with ExxonMobil holding the rest. The estimated send-out capacity of the Golden Pass Terminal will be approximately 18 million metric tonnes per annum (mtpa) of LNG and the facility is expected to be operational in 2024.

See also  How to navigate the market, what stocks to buy, what to avoid as RBI sets policy rate path at pre-pandemic level

To correlate the numbers, then: Last year, Germany imported 142 billion cubic meters (bcm) of gas in 2021, down 6.4% from 2020, an average of around 12 bcm per month (although actual month-to-month usage would not reflect this arithmetic mean due to different seasonal usage). This figure comes from data sources that do not quantify the individual sources of these supplies, but as an indication, according to data from Independent Commodity Intelligence Services (ICIS), for the month of December 2021, natural gas coming from pipelines from the Russia amounted to 32% of Germany’s total imports that month, followed by supplies from Norway (20% of the total) and the Netherlands (12% of the total). Using this December percentage yields a full year figure of just over 45 billion cubic meters of natural gas imported by Germany from Russia, which equates to just under 33 million metric tonnes of LNG, or just over 40 million tonnes of oil equivalent. The 33 million metric tons of LNG for the year for Germany from Russia compares to the Golden Pass total figure for the year of 18 million metric tons per year of LNG.

So clearly, for Qatar to make a significant dent in Germany’s gas imports from Russia – not to mention allowing Germany to also substitute Qatari gas for Russian oil imports (in 2021, l (Germany imported an average of 555,000 bpd, or 34% of its total, Russia’s most crude oil of any EU country) – Qatar should do more, and as soon as possible. The cornerstone of Qatar’s efforts are its plans to significantly expand its flagship North Dome natural gas field capacity, but this is unlikely to be fully achieved before the 2027 target at the earliest. The supergiant North Dome natural gas field, together with the neighboring 3,700 square kilometer area of ​​Iran’s South Pars field, comprises by far the largest unassociated natural gas field in the world. Conservative estimates suggest that the entire 9,700 square kilometer site contains at least 1,800 trillion cubic feet of non-associated natural gas and at least 50 billion barrels of natural gas condensate. This abundant resource had, for many years, allowed Qatar to be the world’s largest exporter of LNG, although it lost this position for a time to Australia. Qatar’s loss of reputation was the product of the moratorium it imposed in 2005 on further development of the North Dome site, but this was later lifted in the first quarter of 2017.

See also  LIC shares fall for 9th day as end of core investor lockdown nears; tanks 25% of the IPO price; buy, sell, hold?

Related: Blackouts threaten millions of UK homes

As it stands, Qatar can produce more than the 77 million metric tons per year (about 106 billion m3 per year) of North Dome’s official LNG capacity – last year it produced about 110 billion m3 – and plans are to increase this to 110 mtpy with the addition of four more trains from 2025 and to 126 million mtpy with the addition of two more trains by 2027. To recap, Germany’s estimated annual natural gas imports from Russia are around 45 billion cubic meters, or just under 33 million metric tons of LNG. . So, in order to fully become Germany’s substitute for Russian gas now – assuming that Germany’s LNG import infrastructure is ready now, rather than at some as yet undetermined date – Qatar would have to send more than 58 % of all its LNG to Germany, ignoring all other calls for this gas. By the end of last year, not only had Qatar put in place long-term supply contracts for domestic consumers, of course, but also for its valued customers in Asia (Asia was the biggest market Qatar for LNG deliveries last year, with a total of 78.5 billion m3 delivered), but also in various other countries in Europe, representing around 5% of total European consumption. Last year, notable European customers were Italy (6.6 billion m3) and the United Kingdom (6.2 billion m3), Belgium (3 billion m3), Spain (2. 7 billion m3) and Poland (2.4 billion m3), according to industry data.

See also  Sensex soars 600 pts, Nifty just below 16800; here is what is pulling the markets up?

All of this presupposes, of course, that there is a genuine willingness on the part of Germany to genuinely participate in, let alone lead, any genuine European Union-wide ban on Russian gas and oil. , which is highly debatable. As analyzed in depth in my new book on world oil markets, Germany was at the forefront in the EU of a series of measures designed to circumvent sanctions mainly led by the United States before 2011/ 2012. Shortly after the US announced its unilateral withdrawal from the JCPOA agreement in May 2018, the EU decided to impose its “blocking law” which prohibited European companies from following US sanctions. Around the same time, German Foreign Minister Sigmar Gabriel warned: “We must also tell the Americans that their behavior on the Iranian question will lead us Europeans to adopt a common position with Russia and China versus the United States. Soon after, Germany played a key role in the EU by introducing a special purpose vehicle – the “Trade Support Instrument” – which would act as a clearing house for payments made between the Iran and the EU companies working there. This time around, following Russia’s invasion of Ukraine, Germany took a similar note, as analyzed in detail by Oilprice.com, with its only real flurry of activity having been to ensure that Russia does not stop supplying it with oil or gas because its companies are unable to pay in the way Moscow prefers and complain about how difficult such a ban is for it.

By Simon Watkins for Oilprice.com

More reading on Oilprice.com:

Read this article on OilPrice.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here