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Qatar and Germany to discuss LNG agreement

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Qatar and Germany to discuss LNG agreement

Qatari Emir Tamim bin Hamad al Thani will visit Berlin to discuss an agreement to supply Qatari liquified natural gas (LNG) to Germany.- Photo: REUTERS/Issei Kato

Qatari Emir Tamim bin Hamad al Thani will visit Berlin and meet with German Chancellor Olaf Scholz today.

Discussions are expected to revolve around an agreement to supply Qatari liquified natural gas (LNG) to Germany. The supply of LNG is crucial to German attempts to reduce its dependence on gas imports from Russia. Scholz recently visited the Netherlands with aims to secure a similar agreement.

Negotiations to reach a formal agreement have recently encountered difficulties due to disagreements on its duration, price indexation and the rerouting of Qatari gas from Germany to other countries. Of these disagreements, the most decisive is price indexation—Qatar demands that the pricing structure be tied to oil prices which currently would result in Germany paying high premiums.

Expect negotiations to be drawn out as both sides attempt to address points of disagreement. Ultimately, an agreement largely on Qatari terms is likely due to Germany’s willingness to accept high LNG prices as a tradeoff for eliminating dependence on Russian gas. Expect Qatar to benefit from increasing global demand for its natural gas as western countries seek non-Russian suppliers—which concurrently will increase its geopolitical influence concerning global energy security.

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