SOURCE / ECONOMY
German utilities close to long-term agreements on LNG with Qatar, sources say
Published: Sep 22, 2022 08:00 PM
A coal-fired power plant operated by German energy supplier RWE is seen in Neurath, western Germany, on July 13, 2022. In response to a squeeze of Russian gas supplies, Germany has reactivated mothballed coal power plants to take the burden off gas. Photo: cnsphoto

A coal-fired power plant operated by German energy supplier RWE is seen in Neurath, western Germany, on July 13, 2022. Photo: cnsphoto


German utilities RWE and Uniper are close to striking long-term deals to buy liquefied natural gas (LNG) from Qatar's North Field Expansion project, three sources familiar with the matter said.

Talks between Germany and Qatar have been fraught with differences over key conditions such as the length of contracts and pricing but the industry sources said that the parties were expected to reach a compromise soon.

While supply deals with Qatar would be positive for Germany, they would not offer an imminent solution to Berlin's energy crisis as the vast North Field Expansion project is not expected to come online before 2026.

Reuters reported in May that the talks had run into difficulties because Germany was reluctant to commit to deals for at least 20 years, and it also wanted prices linked to Dutch benchmark gas prices, rather than oil. 

One of the sources said that the talks were now more constructive than a few months ago. Another source said the utilities were likely to agree to 15-year deals, while a third source said a deal could be reached within weeks.

Uniper told Reuters that it remained in talks with Qatar but had not reached a deal.

At the moment, the two utilities buy LNG from Qatar on the spot market. RWE signed a deal with Qatar in 2016 for up to 1.1 million tons of LNG a year, but that expires next year.

RWE and Uniper are unlikely to sign agreements with Qatar during Scholz's visit as government representatives typically strike broader agreements first, which then lay the ground for commercial sides to finalize details, a source said.

Qatar is partnering with international companies in the first and largest phase of the nearly $30 billion expansion that will reinforce its position as the world's top LNG exporter.


Reuters