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Long before the re-emergence of the ‘Pan-Arab’ ideology now increasingly evident among several leading Middle Eastern countries, Qatar had sought to go its own way, neither aligning fully with the U.S.-led power bloc on the one side nor the China/Russia-lead bloc on the other. This is in part a reflection of the hard facts that it shares the huge North Dome/South Pars natural gas reservoir with China/Russia’s key proxy in the region, Iran, and is geographically positioned directly between what was the U.S.’s key ally in the region, Saudi Arabia, on its west and Iran on its east. It is also a function of nationalist sensibilities of self-reliance, and all of these factors combine into Qatar’s decision to put itself forward as a key means by which Germany may finally be able to consider enacting a ban on importing oil and gas from Russia, catalyzing more European Union (E.U.) member states to do the same. Just over a week ago, Qatar signed a declaration of intent on energy cooperation with Germany aimed at becoming the de facto E.U. leader’s key supplier of liquefied natural gas (LNG) going forward. These new supplies of LNG from Qatar would come into Germany through existing importation routes augmented by new infrastructure approved by the German Bundestag on 19 May. This includes the deployment of four floating LNG import facilities on its northern coast, and two permanent onshore terminals, which are even now under development, according to sources within the E.U.’s energy security apparatus exclusively spoken to by Oilprice.com last week. These plans, said one of the sources, will run in parallel with, but are likely to be finished significantly sooner than, plans for Qatar to also make available to Germany sizeable supplies of LNG from the Golden Pass terminal on the Gulf Coast of Texas, in which QatarEnergy holds a 70 percent stake, with ExxonMobil holding the remainder. The Golden Pass terminal’s estimated send-out capacity will be around 18 million metric tons per year (mtpy) of LNG and the facility is expected to be operational in 2024.
To correlate the figures, then: last year, Germany imported 142 billion cubic meters (bcm) of gas in 2021, down 6.4 percent from 2020, an average of around 12 bcm per month (although real month-by-month use would not reflect this arithmetical mean average due to differing seasonal usage). This figure comes from data sources that do not quantify the individual sources of these supplies, but as a guide, according to data from Independent Commodity Intelligence Services (ICIS), for the month of December 2021, natural gas coming via pipelines from Russia amounted to 32 percent of Germany’s total imports that month, followed by supplies from Norway (20 percent of the total) and the Netherlands (12 percent of the total). Using this December percentage gives a figure for the entire year of just over 45 billion cubic meters of natural gas being imported by Germany from Russia, which equates to just under 33 million metric tons of LNG, or just over 40 million tons of oil equivalent. The 33 million metric tons of LNG for the year for Germany from Russia compares to the entire Golden Pass figure over the year of 18 million metric tons per year of LNG.
So, clearly, for Qatar to make a meaningful dent in Germany’s gas imports from Russia – let alone to allow for Germany to substitute Qatari gas for Russian oil imports as well (in 2021 Germany imported an average of 555,000 bpd, or 34 percent of its total, the most crude oil from Russia of any country in the E.U.) – more would have to be done by Qatar, and as quickly as possible. The cornerstone of these efforts from Qatar comes in its plans to dramatically expand its flagship North Dome natural gas field capacity, but this is unlikely to be fully achieved before the target point of 2027 at the earliest. The supergiant North Dome natural gas field, together with the neighboring 3,700 square kilometer area of Iran’s South Pars field, comprises by far the largest non-associated natural gas field in the world. By conservative estimates, the entire 9,700 square kilometer site holds at least 1,800 trillion cubic feet of non-associated natural gas and at least 50 billion barrels of natural gas condensates. This abundant resource had, for many years, allowed Qatar to be the number one LNG exporter in the world, although it did lose that spot for a time to Australia. Qatar’s loss of standing had been a product of the moratorium it had imposed in 2005 on the further development of the North Dome site but this was then lifted in the first quarter of 2017.
As it stands, Qatar can produce more than the 77 million metric tons per year (around 106 bcm per year) of LNG official capacity of the North Dome – last year it produced around 110 bcm – and the plans are to increase this to 110 mtpy with the addition of four more trains from 2025 and to 126 million mtpy with the addition of two further trains by 2027. To recap, Germany’s estimated yearly imports of natural gas from Russia are around 45 bcm, or just under 33 million metric tons of LNG. In order, then, to fully become Germany’s substitute for Russian gas right now – assuming that Germany’s LNG importation infrastructure was ready now, rather than at an as-yet-undecided date – Qatar would have to send over 58 percent of all its LNG to Germany, ignoring all other calls on that gas. As of the end of last year, not only did Qatar have long-term supply contracts in place for domestic consumers, of course, and also for its prized clients in Asia (Asia was Qatar’s biggest market for LNG deliveries last year, with a total of 78.5 bcm delivered), but also it various other countries in Europe, accounting for around 5 percent of total European consumption. Notable European customers last year were Italy (6.6 bcm) and the U.K. (6.2 bcm), Belgium (3 bcm), Spain (2.7 bcm), and Poland (2.4 bcm), according to industry data.
This all pre-supposes, of course, that there is a genuine desire on Germany’s part to genuinely take part in, let alone lead, any real European Union-wide ban on Russian gas and oil and this is highly questionable. As analyzed in-depth in my new book on the global oil markets, Germany was at the forefront in the E.U. of a range of measures designed to circumvent the mainly U.S.-led sanctions before 2011/2012. Shortly after the U.S. announcement of its unilateral withdrawal from the JCPOA deal in May 2018, the E.U. moved to impose its ‘Blocking Statute’ that made it illegal for E.U. companies to follow U.S. sanctions. At around the same time, Germany’s Foreign Minister, Sigmar Gabriel, warned: “We also have to tell the Americans that their behavior on the Iran issue will drive us Europeans into a common position with Russia and China against the USA.” Shortly after that, Germany was a key mover in the E.U. introducing a special purpose vehicle – the ‘Instrument in Support of Trade Exchanges’ – that would act as a clearing house for payments made between Iran and E.U. companies doing work there. This time around, following Russia’s invasion of Ukraine, Germany has struck a similar note, as fully analyzed by Oilprice.com, with its only real flurry of activity having been to ensure that Russia did not stop supplying it with either oil or gas due to its companies not being able to pay in the way Moscow preferred and whingeing on about how difficult any such ban would be for it.
