QatarEnergy and US giant ConocoPhillips have signed a pair of agreements with Germany for the long-term supply of up to 2 million tonnes per annum of liquefied natural gas, marking the first-ever sizeable LNG supply deal between Qatar and the European nation.
Qatar, one of the world's largest gas exporters, will be supplying LNG for a 15-year period from its ongoing North Field East (NFE) and North Field South (NFS) expansion projects, where ConocoPhillips is a key partner.
The LNG deal comes at a time when Germany is continuing its efforts to wean itself off Russian natural gas supplies and is increasingly looking at leading Middle East gas producers to build up its long-term supplies.
Following the deal, the agreed gas quantities will be delivered to a German LNG terminal, which is currently under development in Brunsbuttel in north Germany, with deliveries expected to start in 2026.
The Brunsbuttel complex is scheduled to begin operations this winter.
QatarEnergy chief executive Saad Sherida al-Kaabi said the two LNG deals are momentous for several reasons, as they mark the first long-term LNG supply deal to Germany with a supply period that extends for at least 15 years, contributing to Germany’s long-term energy security.
“They also represent the culmination of efforts between two trusted partners, QatarEnergy and ConocoPhillips, over many years, to provide reliable and credible LNG supply solutions to customers across the globe, and [now], to German end-consumers,” he said.
ConocoPhillips and QatarEnergy are joint venture partners in the NFE and NFS projects, and the buyer is a wholly-owned subsidiary of ConocoPhillips.
“QatarEnergy and ConocoPhillips are excited for the opportunity to responsibly and securely supply world markets with LNG from the Qatari expansion projects,” said ConocoPhillips chief executive Ryan Lance.
Lance noted that the agreements will provide an attractive LNG offtake solution for its new joint ventures with QatarEnergy and position the joint venture as a reliable source of LNG supply into Europe.
Germany is one of several Western European counties seeking to rapidly expand its regasification capacity in the wake of Russia’s invasion of Ukraine in February and as Russian pipeline gas stopped flowing to the continent.
Germany was a major customer of Russian gas and the destination of the now-destroyed Nord Stream subsea gas pipeline.
Germany intends to add 1.4 billion cubic feet per day of regasification capacity by early 2023.
The desire to expand LNG imports is not limited to Germany. According to the US Energy Information Administration, EU member nations and the UK currently stand to expand their LNG regasification capacity from 20.2 Bcfd at the end of 2021 to 27 Bcfd by the end of 2024.
European nations are eyeing multiple LNG supply deals in the Middle East and have already signed deals with Abu Dhabi National Oil Company (Adnoc) and QatarEnergy.
Adnoc in October signed an LNG supply agreement with Austria’s OMV as part of Austria’s drive to reduce its dependence on Russian volumes in the coming years.
As part of the agreement, Adnoc LNG — a subsidiary of the Abu Dhabi giant — is to supply one LNG cargo as early as the end of 2023.
Adnoc’s agreement with OMV follows deals in September with German companies for the supply of LNG and low-carbon ammonia in the coming years.
The Abu Dhabi player plans to supply one LNG cargo for delivery in late 2022 to be used in the commissioning of German company RWE’s floating LNG import terminal at Brunsbuttel.
Adnoc has also reserved further LNG cargos exclusively for Germany next year.
One industry source suggested that while imported LNG from the Middle East could prove to be more expensive than Russian imports for the European nations, it provides long-term energy security and commitment from key Persian Gulf producers.