qatar energy minister  Saad Al Kaabi
Qatar Energy Minister: We won't divert gas out of Europe 'in solidarity'
02:44 - Source: CNNBusiness
Abu Dhabi, UAE CNN  — 

“It’s always nice to be wanted,” Qatar’s energy minister Saad Sherida al-Kaabi said in jest during an exclusive interview with CNN’s Becky Anderson on Thursday. “Everyone in Europe is talking to us,” he said.

Qatar, one of the world’s top suppliers of liquefied natural gas (LNG), has been thrust into the limelight as European states rush to find alternatives to the Russian gas that has powered their economies for decades, as Moscow presses on with its brutal war in Ukraine.

But Kaabi warned the transition will be difficult. Replacing Russian gas supply to Europe is “not practically possible” just yet, he said. Qatar’s current gas capacity won’t satisfy European demand, he said – but it could in the future.

The European Union depends on Russia for about 40% of its natural gas. This week, German economy minister Robert Habeck left the Qatari capital Doha with an understanding to have Qatar supply it with gas. Germany currently has no terminals to receive direct shipments of LNG from Qatar, but it plans to build two.

US President Joe Biden and his counterpart at the European Commission, Ursula von der Leyen, on Friday announced a joint task force aimed at finding alternative supplies of lLNG and reducing overall demand for natural gas moving forward.

“Europe has been a destination for us, and is an important market for us,” the Qatari minister, who is also president and CEO of QatarEnergy, said. “And we will be supplying Europe.”

Qatar has invested $28 billion into expanding its giant North Field and expects gas capacity to rise by more than 60% in four years, he said. After that, around half of its capacity is expected to go to Europe. “Our plan is we want to be 50% east of Suez, 50%, west of Suez,” he said, referring to the Egyptian waterway. Around 80% of Qatar’s gas currently goes to Asian buyers, many of whom have signed long term contracts that don’t allow a diversion of supplies to other buyers.

Here’s what you need to know about the role Qatar can play in Europe’s efforts to wean itself off Russian gas:

What can Qatar do to help reduce Europe’s dependence on Russian gas now?

Russia has the world’s biggest reserves of natural gas, almost double those of Qatar, and its gas supplies account for 40% of the European Union’s usage. Analysts said it’s virtually impossible to replace Russian gas for the time being.

“There is basically no spare LNG in the world market,” said Robin Mills, CEO of Dubai-based energy consulting firm Qamar Energy. Qatar’s own divertible LNG is limited “and bidding for that will drive up prices.”

The only way Qatar can replace Russian gas imports to Europe is by diverting cargoes from other customers who have signed long term contracts, such as those in Asia, something it hasn’t been willing to do. By doing so it may incur compensation claims from those buyers.

Contractually divertible gas gives the seller the flexibility to redirect shipments to the highest value market in response to changing market conditions.

As Europe tries to reduce its reliance on hydrocarbons, emerging economies in Asia, like China and India, may be more attractive destinations for Qatari gas, said Yousef Alshammari, a senior research fellow at London’s Imperial College.

The US could also emerge as a gas supplier to Europe.

The White House said Friday that the US will work toward supplying Europe with at least 15 billion cubic meters of liquefied natural gas in 2022 in partnership with other nations.

“It’s a big opportunity for the US,” said Kaabi. “I think, definitely the US is going to be, you know, one of the largest suppliers, if not the largest supplier [to Europe] at some point,” he said.

Would replacing Russian gas with Qatari energy face logistical issues?

Russia’s gas supply to Europe is delivered via pipelines. There are no gas pipelines from Qatar to Europe so the Gulf nation’s energy would have to shipped to Europe in liquefied form.

“Liquefaction of natural gas is energy intensive, which emits carbon and that offsets climate benefits” of using natural gas, said Alshammari. “It will be hard for European policymakers as they set ambitious climate agendas and net-zero targets.”

European nations will also need infrastructure to support those shipments, which could take time to build, said Karen Young, senior fellow at Washington’s Middle East Institute. Moving to Qatari gas may be easier for countries that already have that infastructure, like the United Kingdom and Spain, she said.

“The problem is that Europe is jumping into an LNG market that cannot accommodate its immediate need for immense volumes,” said Nikos Tsafos of the Center for Strategic and International Studies in Washington DC. “Of course, Qatar could send more gas to Europe, but it hasn’t yet despite incredibly high prices in Europe, which suggests that its flows to Asia might be stickier than we think.”

What would this mean for Qatar-Russia relations?

Qatar is keen to portray its gas deals as commercial transactions, and Al Kaabi said he isn’t in favor of mixing politics with energy.

“This is a commercial agreement between commercial entities,” Al Kaabi told Becky Anderson, referring to potential partnering with German energy companies to supply gas. “From a business perspective, we don’t choose sides, we act as a business and we do our business,” he said.

Qatar would want to present it as a market-based move, “not a strategic alignment against Russia,” said Mills.

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