German utilities close to long-term LNG deals with Qatar

LONDON/FRANKFURT: 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 to help replace Russian gas, 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, who declined to be named, said the parties were expected to reach a compromise soon.

Europe’s biggest economy aims to replace all Russian energy imports by as soon as mid-2024, a Herculean effort for a country that mainly relies on natural gas to power its industry.

Germany, EU race to fix energy crisis

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 also wanted prices linked to Dutch benchmark gas prices, rather than oil. One of the sources said the talks were now more constructive than a few months ago. Another source said the utilities were likely to agree 15-year deals, while a third source said a deal could be reached within weeks.