
Exclusive: Germany and Qatar at Odds Over Terms in LNG Supply Deal Talks – Sources By Reuters
By Marwa Rashad, Andrew Mills, and Christoph Steitz
LONDON – Negotiations between Germany and Qatar over long-term liquefied natural gas (LNG) supply agreements have encountered significant obstacles, as parties involved in the discussions reveal key differences regarding contract terms.
Germany, which aims to achieve an 88% reduction in carbon emissions by 2040, is hesitant to accept Qatar’s requirement for contract lengths of at least 20 years. This requirement is seen as necessary for securing substantial LNG volumes to lessen Germany’s reliance on Russian gas.
As the world’s largest LNG supplier, Qatar is also insisting on specific conditions, including a destination clause that would limit Germany’s ability to reroute the gas to other European regions—a stipulation that is opposed by the European Union.
The complex negotiations between Qatar Energy and German energy companies underscore the challenges the EU faces in diversifying its gas sources away from Russia. The German government is attempting to navigate these discussions while adhering to its environmental targets.
Currently, Germany consumes approximately 100 billion cubic meters of natural gas annually, with around 55% sourced from Russia, and smaller amounts imported from the Netherlands and Norway. The country has supported the development of two LNG terminals and is using four floating storage and regasification units (FSRUs) as a temporary solution. What remains is securing the necessary LNG supplies.
Concerns that the length of LNG contracts could threaten Germany’s decarbonization objectives are part of the ongoing negotiations, with the country also competing for Qatari LNG with other nations. Sources indicate that a deal for LNG supplies from Qatar is not anticipated to materialize soon.
Moreover, Qatar is insistent on oil-indexation for pricing, tying the contracts to oil prices, which reflects the pricing structure they use for sales in Asia. In contrast, German negotiators are advocating for a linkage to the Dutch TTF benchmark. Experts suggest that Qatar holds a favorable position in these discussions due to strong demand for its LNG and its established reputation as a reliable supplier. To finalize a deal, it is likely that German representatives will need to agree to a traditional oil-linked pricing structure, which could expose them to significant financial risks when compared to European hub prices.
In March, German Economy Minister Robert Habeck visited Qatar alongside officials from the country’s major utility firms, RWE and Uniper, to explore options for procuring additional LNG volumes. However, no agreements have been reached thus far. RWE’s previous deal with Qatargas involves the delivery of up to 1.1 million tonnes of LNG annually to Northwestern Europe by the end of 2023.
German companies plan to return to Qatar in May for further discussions, with reports indicating that the Emir of Qatar, Sheikh Tamim bin Hamad Al Thani, will visit Germany later in the month to sign a partnership agreement. This partnership aims to facilitate a substantial increase in long-term Qatari LNG deliveries to Germany, although it may not lead to immediate contract signings.
Additionally, Qatar’s sovereign wealth fund has invested roughly $20 billion in Germany, holding stakes in major companies, including automotive and banking sectors.
Germany hopes to forge a reciprocal partnership with Qatar, allowing German firms such as Siemens Energy to assist Qatar in implementing its recent sustainability initiatives. Sources indicate the necessity for an understanding between Qatari and German companies that LNG is merely a stepping stone toward a broader collaboration between the two nations.