EXCLUSIVE Germany, Qatar at odds over terms in talks on LNG supply deal -sources

Qatari Emir Sheikh Tamim bin Hamad al-Thani meets with German Economic system Minister Robert Habeck in Doha, Qatar March 20, 2022. Amiri Diwan/Handout through REUTERS

LONDON, Might 9 (Reuters) – Germany and Qatar have hit difficulties in talks over long-term liquefied pure gasoline (LNG) provide offers amid variations over key situations, together with the length of any contract, three folks accustomed to the discussions informed Reuters.

Germany, which goals to chop its carbon emissions by 88% by 2040, is reluctant to decide to Qatar’s situations to signal offers of a minimum of 20 years to safe the large LNG volumes it wants to cut back its dependence on Russian gasoline, the folks stated.

Qatar, the world’s largest LNG provider, can also be specifying phrases similar to a vacation spot clause that will stop Berlin from rerouting the gasoline to different areas in Europe, a situation which the European Union opposes. learn extra

The powerful talks between Qatar Power and German utilities spotlight the challenges the EU faces in its ambition to diversify away from Russian gasoline because the German authorities struggles to stability any take care of its carbon discount targets.

Germany consumes round 100 billion cubic meters (bcm) of pure gasoline yearly, with round 55% of that coming from Russia and smaller volumes piped from Netherlands and Norway.

It has backed the development of two LNG terminals and has rented 4 floating storage and regasification items (FSRUs) as a stop-gap measure. learn extra

What it wants now’s the precise LNG. learn extra

“The difficulty of LNG contract size probably placing Germany’s decarbonisation targets in danger is a part of the continuing discussions with Qatar,” one of many folks stated, including Germany was additionally competing with different nations for LNG from Qatar.

One other supply stated that securing LNG provides kind Qatar “just isn’t anticipated to occur quickly”.

Qatar’s authorities communication workplace declined to touch upon ongoing negotiations. Germany’s Economic system Minister was not instantly out there for remark.

Qatar can also be agency on oil-indexation, linking the contracts to grease value, which represents the pricing construction of their various gross sales into Asia, whereas the Germans are looking for linkage to the Dutch TTF benchmark, Felix Sales space, head of LNG at vitality intelligence agency Vortexa, stated.

“Qatar is within the driving seat in these discussions, with a brand new mission underway, robust curiosity of their volumes and an extended historical past as a dependable provider,” Sales space stated.

“To safe this provide, it’s anticipated that the German crew might want to settle for a standard oil linked pricing construction. Leaving the European purchaser with vital monetary publicity in comparison with the European hub costs,” he added.

QUID PRO QUO

German Economic system Minister Robert Habeck in March visited Qatar, together with officers from German utilities RWE (RWEG.DE) and Uniper (UN01.DE), to debate procuring extra volumes however no deal has been agreed thus far.

RWE, Germany’s largest energy producer, in 2016 struck a take care of Qatargas, a unit of Qatar Power, beneath which as much as 1.1 million tonnes of liquefied pure gasoline will likely be delivered to Northwestern Europe yearly by the tip of 2023.

RWE declined to touch upon the talks. Uniper additionally declined to remark, saying solely that its ties with Qatar return a good distance and that it hoped to have the ability to construct on that relationship.

German gasoline corporations will likely be again to Qatar in Might to renew talks, two separate folks accustomed to the method stated.

They stated that Emir of Qatar, Sheikh Tamim bin Hamad Al Thani, will go to Germany within the second half of Might to signal a partnership settlement between the 2 nations. learn extra

Nonetheless, this doesn’t imply that long-term LNG offers will likely be concluded, because the partnership is aimed toward paving the best way to considerably ramp up long run Qatari LNG deliveries to Germany, they added.

Qatar’s sovereign wealth fund, the QIA, has round $20 billion invested in Germany, with stakes in Volkswagen (VOWG_p.DE) and Deutsche Financial institution (DBKGn.DE).

Germany hopes for a potential two-way partnership with Qatar the place German corporations similar to Siemens Power (ENR1n.DE) and others might assist Doha with its makes an attempt to place into motion a sustainability plan it launched late final yr.

“There must be a gents’s settlement between the Qataris and German corporations, that LNG ought to solely be step one in an extended collaboration between the 2 nations,” stated one of many folks, a German business supply.

Reporting by Marwa Rashad in London, Andrew Mills in Doha and Christoph Steitz in Frankfurt; Extra reporting by Markus Wacket in Berlin; Enhancing by Veronica Brown and Alexander Smith

Our Requirements: The Thomson Reuters Belief Rules.