As the risk of a conflict between Ukraine and Russia grows – one that would undoubtedly imperil European energy security – the Emir of Qatar is invited to visit President Biden at the White House at the end of this month to discuss opportunities for the country to supply liquified natural gas (LNG) to Europe. This is a major geo-economic step to mitigate Russian saber rattling over Ukraine amidst an energy crisis on the continent. Several factors, including Russia’s Gazprom deliberately squelching gas supply, inclement weather, hasty moves towards decarbonization, emptied gas reserves, have spiked energy prices, and an emboldened Russia – Europe’s primary energy supplier.
Russia exports approximately 23.3 billion cubic feet per day of piped natural gas, about 40% of Europe’s supply. The Kremlin could weaponize the supply as it has before, significantly impacting the European economy. To counter Russia’s aggressive policies towards Ukraine, the Biden administration is ready to place targeted sanctions on Russian gas exports, including the newly completed Nord Stream 2 (NS2), and is looking for ways to decrease the blowback. Presently, there are not enough reserves of gas to substitute for a considerable disruption in supply from Russia.
As the White House explores solutions to the looming energy crises, it has opened talks with European, North African, and Central Asian countries to find additional gas supplies if Europe’s supply is disrupted.
Qatar has a major role to play here. It is one of the largest exporters of LNG – producing one-fifth of the global supply safely, reliably, and at a low cost. This could be a plausible solution for Europe; however, Qatar is producing at near-maximum capacity with much of that supply tied up in long-term contracts. If Qatar was to send all its uncontracted supplies to Europe, the total would be somewhere near 60 thousand cubic meters per day (mcm/d), a mere fraction of Russia’s daily exports, per a source from S&P Global Platts. This underscores the need for Europe to commit to reliable, dedicated long-term supply contracts with the Gulf nation as means to avoid such dependency in the future.
Qatar has proven itself to be a reliable Western partner in the past. In a broader security sense, Doha played a key role in evacuating of more than 60,000 Afghans in the wake of the Taliban takeover of Afghanistan. It was also a willing partner in the post 9/11 War on Terror.
From an energy perspective, Doha has a track record of working with Europe. In late 2021 following COP 26, Qatar rerouted four LNG tankers to the UK to assist with the energy shortage. Lastly, Qatar is not financially incentivized to offer its support. As one of the world’s largest LNG exporters, Qatar’s terminal is already operating at full capacity to meet the growing global demand.
The United States and Europe will need to convince Qatar’s LNG clients to reroute some suppliers to Europe. Doing so would require the United States to compensate Qatar and client countries. Furthermore, the United States may also need to make deals with Japan, South Korea, and India to relinquish some of their oil and reroute to Europe – mainly Germany, where 41.5 million households rely on gas.
In the short term, any deal struck between the Emir and the Biden Administration will rely on the willingness of client countries to reroute and the availability of unallocated LNG. Though a complex situation, this is not unprecedented – in 2011, Qatar did reroute LNG to Japan after the tsunami, setting the standard that only in a crisis will Qatar redistribute LNG.
If the talks are successful, there is still the question of how Qatar gets the LNG to Europe. Qatar must have the shipping capacity, while Europe must have the offtake and regasification infrastructure. The short answer to both is yes – Qatar maintained its dominance in liquefied natural gas exports, having exported 104.8 billion cubic meters (BCM) of LNG in 2019 by using its 45 Q-Flex and Q-Max LNG carrier; other carriers can be leased. Furthermore, Qatar has recently embarked on an expansion project to raise its LNG production capacity by 64 percent by 2027 to meet the growing demand for gas.
As for regasification capacity, there seems to be enough to go around. As of 2021, Europe boasted approximately 150 million metric tons per year (MMt/y) of regasification capacity, more than enough to accommodate Qatari shipments.
The Emir traveling to Washington underscores the urgency of the energy crises and highlights the special relationship between Qatar and the United States. This visit will mark the first gulf state leader to be invited to Washington and demonstrate the power of low-cost clean energy producers – a key goal for the Biden administration.
From an energy perspective, Doha has a track record of working with Europe. In late 2021 following COP 26, Qatar rerouted four LNG tankers to the UK to assist with the energy shortage. Lastly, Qatar is not financially incentivized to offer its support. As one of the world’s largest LNG exporters, Qatar’s terminal is already operating at full capacity to meet the growing global demand.
This impending conflict between Russia and Ukraine has illuminated the need to diversify the EU’s gas supplies. The 27-country block can no longer rely on Russian energy. This will require complex multilateral diplomacy led by Washington in the coming months.
On January 26, Germany’s foreign minister Annalena Baerbock announced that a sanctions package would include the Nord Stream 2 Pipeline if Russia’s aggression toward Ukraine escalated. Russia responded with: “If a constructive response does not arrive and the West continues its aggressive course, Moscow will, as the president has said on more than one occasion, take the necessary retaliatory measures,” – meaning it could invade Ukraine and weaponize energy to Europe.
The EU’s myopic overreliance on Russian gas has long been a security vulnerability for the continent. Germany’s Energiewende backfired. Russia’s leverage plays out in real-time, with many Europeans hesitant to sanction their Russian energy suppliers in response to Moscow’s irridentism. It is time for the EU to consider and pursue safer alternatives. If the United States can facilitate a short-term deal to provide the necessary LNG, it could open the door for long term contracts between Qatar and the EU members. Qatar would be a more reliable supplier for the EU energy supply than the Kremlin-controlled Gazprom. It won’t be sufficient to fill the gap left by Russia should it turn off the spigot, but every little bit helps in mitigating Russia’s energy weapon. It’s high time for Europe to counter the gas supply threat and develop alternative and trustworthy alternatives.
With assistance from Riley Moeder and James Grant
