IMG.gif

Germany to Start Receiving Qatari LNG in 2026

Copyright © 2023 Energy Intelligence Group All rights reserved. Unauthorized access or electronic forwarding, even for internal use, is prohibited.
LNG,Port,Liquefied,Natural,Gas,Tanker,Terminal

QatarEnergy has signed two long-term sale and purchase agreements with ConocoPhillips to supply LNG to Germany for the first time.

Under the agreement, ConocoPhillips will supply about 2 million tons per year of LNG for at least 15 years to the German LNG receiving terminal at Brunsbuettel from 2026.

The Brunsbuettel terminal is located near Hamburg on the Elbe River and has a regasification capacity of 8 billion cubic meters per year.

It is one of as many as six floating regasification facilities being developed by Germany that are expected to be brought on line by the end of next year.

The deal is the first long-term LNG supply agreement for Germany, which is seeking to cut its dependence on Russian gas after Moscow's invasion of Ukraine.

The gas will come from Qatar's two-phase LNG expansion, which will increase its total liquefaction capacity to about 126 million tons/yr from 2027.

First Step on Long Journey

"The agreement between QatarEnergy and US group ConocoPhilips is an important first step on a long journey," said Timm Kehler, head of German industry association Zukunft Gas.

However, Kehler pointed out that the deal is just one of many that will be required, given that the limited volumes involved represent only about 6% of Germany's historical gas imports from Russia.

While Germany has been moving quickly to find alternatives for Russian gas, there were questions about its willingness to commit to long-term supply contracts, given its plans to transition away from fossil fuels in the longer term.

German Economy Minister Robert Habeck said on Tuesday that he was happy with the 15-year term of the contract and would have also accepted a longer duration.

But he also noted that Germany will start reducing its gas consumption from the 2030s as part of efforts to reduce its greenhouse gas emissions.

Europe's Largest Gas Market

The LNG shipped to Germany will be sourced from the North Field East (NFE) and North Field South (NFS) expansion projects in Qatar, according to a statement issued by QatarEnergy.

"Germany is the largest gas market in Europe ... and we are committed to contribute to the energy security of Germany and Europe at large," said Qatar's Energy Minister Saad al-Kaabi, who is also CEO of QatarEnergy.

Qatar awarded stakes in the 32 million ton/yr NFE expansion project earlier this year to TotalEnergies (6.25%), Exxon Mobil (6.25%), Shell (6.25%), Eni (3.125%) and ConocoPhillips (3.125%).

Stakes in the 16 million ton/yr NFS project, went to Total (9.375%), Shell (9.375%) and ConocoPhillips (6.25%).

ConocoPhillips CEO Ryan Lance said the agreements announced on Tuesday "will provide an attractive LNG offtake solution for our new joint ventures with QatarEnergy and position the joint ventures as reliable sources of LNG supply into Europe."

In an interview with Energy Intelligence earlier this year, al-Kaabi indicated that up to half of Qatar's new LNG production from NFE and NFS could head west.

At the time he indicated that 10-15 year deals "are probably what are most acceptable to both sides," but added that "it's not just about duration, it's about price."

Qatar is certainly not averse to signing longer deals and recently inked a record 27-year contract with Sinopec to supply China with 4 million tons/yr of LNG.

For more coverage of the Ukraine crisis, visit Ukraine Crisis: Energy Impact >

Topics:
LNG Contracts, Trade, Ukraine Crisis, Gas Supply, NOCs, Independent E&Ps
Wanda Ad #2 (article footer)
#
Saudi Arabia's energy minister has warned once again that sanctions and underinvestment may lead to a global energy supply crunch.
Mon, Feb 6, 2023
The deal will likely benefit both parties as they look to compete for upcoming FLNG projects across Africa.
Mon, Feb 6, 2023
Indian state-run natural gas distributor Gail is counting on US LNG, and a new supply contract, to recoup the loss of Gazprom volumes.
Wed, Feb 1, 2023