There’s still enough gas to get us through the rest of the winter, even as Russia turns off gas supplies in response to sanctions. The industry association of storage companies in Germany came to this conclusion a few days ago. In Germany, 10 percent of electricity was generated from natural gas last year. 88.4 percent were imported, about half of them from Russia. Generating electricity from gas is considered an important bridging technology in expanding the supply of renewable energies. Despite this importance, German politics had so far relied heavily on Russia.
In contrast to neighboring countries, Germany does not even have its own LNG terminal, i.e. a loading station for liquefied natural gas. After years of stagnant planning, this is finally to be built in Stade, Lower Saxony. But the approval process alone is likely to take another one to one and a half years. German energy suppliers will therefore remain dependent on other European terminals in the medium term.
But where are the quantities supposed to come from? So far, 40 percent of European natural gas imports come from the country that attacked the Ukraine on Thursday morning. Replacement deliveries from Europe are hardly available. Norway is already producing at full capacity, the Netherlands wants to stop production after the earthquake in the Groningen region. This winter, the United States in particular is stepping into the breach. Thanks to extensive shale gas production (fracking), the USA has become the world’s largest liquid gas exporter – and has thus held the West together in terms of energy supply so far.
In February, Europe will be the top destination for US gas supplies for the third straight month. Three quarters of the American LNG volume went across the Atlantic in January, compared to the same month last year, the delivery volume has doubled. However, several members of Congress have now come out in favor of cutting exports in order to combat domestic inflation.
A lot of liquid gas has already been sold, including to China
This is one of the reasons why US President Joe Biden welcomed Qatar’s Emir Tamim bin Hamad al-Thani to the White House last month with many words of praise. The emirate was even declared a key non-NATO ally of the United States. It is to step in as a key gas supplier for the European Union during the crisis.
However, it remains questionable whether this will be possible within a short period of time. “Until now, Europe has not been a stable market for LNG,” explains Georg Zachmann from the Bruegel think tank. “Germany, for example, intends to generate 80 percent of its electricity from renewable energies by 2030.” The Qataris as well as the Americans are interested in long-term purchase quantities, not in the role of stopgap, according to Zachmann: “This is due to the high investment costs for production and conversion into LNG.”
Liquid gas is produced when natural gas is cooled to minus 162 degrees Celsius. In this aggregate state, the substance takes up only one six hundredth of the original volume – an important prerequisite for storage and transport on special tankers, whose limited availability is another bottleneck in short-term procurement. Around the turn of the year, some LNG ships destined for East Asia were already diverted to Europe. Biden had also campaigned for South Korea and Japan. The core problem is that most of the quantities extracted by Qatar have already been contractually bound, i.e. sold, not least to the increasingly energy-hungry China.
In Europe, long-term agreements have so far been resisted, and the Commission’s Competition Directorate was even investigating QatarEnergy up until this month – on suspicion that the state-owned company had made illegal agreements with European customers about the transfer of supplied gas.
This week, Qatar’s ambassador to Germany said his country could help diversify energy sources. He promoted direct talks between Berlin and Doha. Natural gas producing countries met for a summit in the Qatari capital on Monday and Tuesday. Emir Tamim announced that he would increase production from 77 million to 126 million tons by 2027. “The crisis suits Qatar, like all the producing countries in the Gulf,” says Andreas Krieg of London’s King’s College. “They are increasing their market power and thus their political importance.” Qatar’s Energy Minister Saad bin Sharida al-Kaabi initially had to disappoint European hopes for a one-stop solution. At the moment, his country can only divert ten to 15 percent of the contractually bound delivery quantities.