Qatar Signs Biggest LNG Deal Ever With China: Concerns for Europe? “Confirms we need to move away from fossil gas faster”

Quite a lot, given that in recent months several European leaders have explicitly looked to Qatar to at least temporarily replace the lack of Russian gas imports. However, Qatar’s choice over China really comes as no big surprise to anyone, says energy policy professor Thijs Van de Graaf (UGent). “European countries have not wanted to make agreements with Qatar for 20 years: Europe is against gas on long-term contracts, while Qatar ignores only short-term agreements. The Chinese, for their part, have no problems with long-term contracts to meet their growing energy demand.”

Qatar currently remains one of the major remaining gas suppliers to Europe. Together with the United States and Nigeria, among others, the country supplies LNG under some old long-term contracts. But significantly increasing those volumes won’t be an option.

“The EU also has ambitious climate targets, which means that we are actually a shrinking gas market,” says Van de Graaf. “By 2030, the demand for gas will be lower than today. This is partly our salvation: in the long run, we will replace Russian gas with our own electricity, biomethane or hydrogen. We will create infrastructure worth billions of euros for the supply of LNG for only 5 years”.

Van de Graaf thinks not. According to him, the question of whether it will be a mild or harsh winter has a much greater impact. “We are in a somewhat crazy situation: there is a positive atmosphere, because gas prices have dropped spectacularly. But we are not out of the crisis yet”.

This drop in gas price is a result of low gas demand. “Our stocks are full and so far the temperature has been relatively warm. If temperatures drop, demand will increase and so will the price. We are lucky now that we have not had to overspend on our gas stocks. Experts so I think we will overcome the relatively unscathed winter”.

The question will be what’s left of those stocks after the winter, Van de Graaf suggests. “If they’re below 30 percent, we’re going to have a lot of problems next year at the start of the heating season. Here’s why it applies now: Every cubic foot of gas we save now, we won’t have to buy again next year.”

“Replacing Russia’s gas supplies 1-for-1 is not a good idea. You can’t count on it, because most LNG volumes are already fixed under long-term contracts,” says Van de Graaf. “Moreover, you are also among the alternative suppliers with geopolitical or diplomatic problems: look at countries like Qatar, Algeria or Azerbaijan: either there are human rights issues, or there is political disagreement, or there is even war”.

“Nevertheless, there has been some solidarity over the last year, including among OECD countries. We were able to buy LNG from Japan. Furthermore, the EU also bought cargoes that were actually destined for countries developing countries. electricity sector, among others.”