Germany goes on a mission to secure supplies of Qatari gas

g1 [Official account of the Amir Diwan of the State of Qatar]

Germany’s Vice-Chancellor Robert Habeck visited Qatar over the weekend in a bid to secure alternatives to Russian gas supplies, with little chance of immediate success in a country seen with suspicion in Germany for its human rights violations.

The newish German government wanted to act differently from its predecessors in its foreign policy relations by putting ethics at the centre. “We will make our foreign, security and development policy more value-based,” the coalition treaty read.

Yet Habeck had to play nice in a country seen with suspicion in Germany for its repeated human and labour rights violations – all in order to secure a fraction of the LNG coming from the world’s second largest exporter.

Before his departure, Habeck had stated that “value-based energy policy is to become independent of fossil energies”.

“I am now here in Doha, on the second day of a journey that is somehow totally strange,” Habeck explained late on Sunday (20 March). “It is the Ukraine crisis that has brought me here and the attempt to get off Russian gas and oil and coal as quickly as possible,” he added

Habeck claims he was successful in Doha, despite initial fears that Berlin’s previous snubbing of the Qataris had soured the negotiations before they had even started. Two times, German President Frank-Walter Steinmeier had already cancelled his visits to Doha.

“The good news is that this will be provided,” Habeck said in reference to short-term LNG supplies that are meant to make Germany less dependent on Russian gas. “Now the companies have to make these contracts for it,” he added.

Berlin looks for alternatives as German gas storage hits record lows

Germany has begun searching for alternative gas suppliers in the event that imports from Russia are interrupted due to tensions in Ukraine.

Competing for scarce LNG

Qatar in theory is best placed to help Germany wean itself off Russian gas. The country ships 107 billion cubic meters of liquefied natural gas (LNG) per year, more than the 70-something bcm that Germany imports from Russia via pipelines.

The winter of 2022-23 is seen as the most crucial in the transition away from Russian gas, but there are doubts whether Qatar will be able to supply much of it in the short term, despite Habeck’s positive rhetoric.

Only 10-15% of the Qatari LNG production can be diverted and Europe would have to directly compete with the Qatari’s established long-term buyers, most of which are in Asia, Bloomberg reported.

While this will be less of an issue in a few years – Qatar aims to boost LNG output by around 60% by 2026 – officials are still knocking on Doha’s door to secure LNG cargoes in the short term.

While the German delegation was in town, so were the Japanese, the world’s largest LNG importers, as well as South Korean Prime Minister Kim Boo-kyum, another significant LNG importer. All of them are competitors for the small amount of spot LNG available.

“This summer, rich European nations will go head-to-head with poorer emerging Asian economies, with the highest bidder taking the spoils,” writes analyst Seb Kennedy. “This is an annual event that Asia usually wins, but the stakes are much higher this year,” he added.

Can Qatari gas offset disruptions to Russian supply in Europe?

The United States, the world’s top natural gas producer, has asked Qatar and other major energy producers to divert gas supplies to Europe if Russia attacks Ukraine and the United States imposes sanctions on Russia.

Regasification: a major obstacle for Germany

There is another major obstacle to boosting LNG imports in Germany: the lack of regasification facilities. LNG requires special regasification terminals in order to turn the liquid back into a gas suitable for pipeline transport, and Germany has none of those despite plans to fast-track their construction at “Tesla speed” as Habeck put it on 11 March.

The closest LNG terminals are located in the Polish port of Swinoujscie (5 bcm per year), the Dutch port of Rotterdam (12 bcm) and the Belgian port of Zeebrugge (9 bcm), all of which cannot dedicate their entire capacity to German demand.

Nonetheless, the political will to see this through is high in Berlin. Already on 12 March, Chancellor Olaf Scholz’s right-hand man and advisor, Jörg Kukies, had met with Qatari foreign minister Mohammed bin Abdulrahman Al-Thani. “We discussed bilateral cooperation particularly in energy and corporate investments,” Kukies tweeted.

Germany signs initial contract to build first LNG terminal

The German state bank KfW and the Dutch utility Gasunie have signed a memorandum of understanding (MoU) on the construction of the first LNG terminal in Brunsbüttel, Germany.

Labour rights and business opportunity

Qatar is one of the many destinations the vice-chancellor will travel to in the coming days to ensure German homes can be kept warm next winter, even without Russian gas.

“We cannot undo the strategic mistakes of the last decades within three weeks,” he told public broadcaster ARD.

But in the process of trying, Habeck risks upsetting both his Green party voters and the sensibilities of the wider German population.

For years, Qatar has been reviled in the German discourse. Stories of migrant workers who have died during the construction process of the stadiums built to host the 2022 world cup have been widely reported in Germany.

“There are only 300,000 Qataris, 10% of the population, while 3 million people live here, The rest work here often in not so good conditions,” Habeck noted.

Labour rights have improved in Qatar, thanks in large part to foreign pressure. Notable improvements include the scrapping of the migrant worker citizen patronage system, which severely restricted the mobility of migrants, and laws preventing construction workers from operating in the blistering sun.

“The laws are written, but they certainly need improvement, and secondly they are not fully implemented yet,” Habeck added.

Despite reservations over labour rights, German industry appears to see opportunity in the air. More than 120 representatives of German companies applied to travel alongside Habeck in Doha. In the end, just over 20 of them were allowed in.

Martina Merz, the CEO of industrial giant Thyssen-Krupp, appeared satisfied with the trip. Habeck did great things, breaking the ice with Qatari officials, creating contacts and acting in a very “business-oriented” manner, she told Handelsblatt. Perhaps people have been too cautious in the past with regards to Qatar, she concluded.

Next on Habeck’s agenda is a visit to the United Arab Emirates, with his more than 20 industry executives in tow, to discuss, amongst other things, how best to build a constructive hydrogen partnership.

The Green Brief: The price of freedom gas

Confronted with a belligerent Russia at its eastern border, the European Union has started consulting with allies about possible alternatives to its supply of Russian gas. The financial and political cost could be high, however.

[Edited by Frédéric Simon]

Subscribe to our newsletters

Subscribe