After signing a fifteen-year contract with Germany in November 2022, Qatar concluded, on October 11, two gas supply agreements lasting twenty-seven years with TotalEnergies. Increasingly courted by Europeans since the end of purchases of Russian gas linked to the war in Ukraine, the small Gulf country sees its large gas resources fueling desire on the Old Continent. War in Ukraine, gas prices, environment… The emirate’s Minister of Energy, Saad Sherida al-Kaabi, also CEO of the national company QatarEnergy, answers questions from L’Express.
L’Express: Where are the discussions with European countries regarding Qatari gas?
Saad Sherida al-Kaabi: Like other gas supplier countries, we are being approached by many states at the moment. Discussions are underway with customers, not only European, but also Asian and South American. However, it is difficult for me to describe to you the state of progress of the various negotiations, since they are not always linear and can drag on certain points before suddenly accelerating. However, things are moving forward, as shown by the signing of this agreement with France.
Does Qatar have the capacity to fully replace Russia with regard to gas supplies to Europe?
No. Neither Qatar nor any other country can do this. The volumes of gas that were transported to Europe by Russia were too large. On the other hand, strengthening our partnership with Europe can allow the latter to diversify its supplies. Several contracts have already been signed, and we can expect it to continue like this. It is beneficial for both parties: in the same way that a buyer has an interest in diversifying their suppliers, we want to diversify our buyers. This is a strategy that we began to implement in recent years, even if the war in Ukraine accelerated the process.
Then, to return more specifically to the question of Russian gas, I think that, in the long term, we must expect that part of it will come back to supply Europe. It seems illusory to me to believe that Russia will be boycotted forever. Let us remember that states that were at war with each other during World War II are now doing business together. No one accepts the massacres taking place in Ukraine, and our diplomacy has been very clear on this. But wars end, truces are signed, and things eventually change.
With the North Field expansion project expected to increase Qatar’s gas production by 60% by 2025-2026, is stopping Russian gas imports into Europe a boon for Doha?
This expansion project is not linked to the war in Ukraine and was decided several years before the start of the conflict. However, this actually gives more interest to Qatari gas, to the extent that the Europeans now want to diversify their suppliers. When we announced in 2019 our intention to increase our production capacity, we were absolutely certain that the market was going to need more gas between 2026 and 2030. This ended up happening earlier, because of the war in Ukraine, but our analysis was correct. Ultimately, our export capacities will increase from 77 million tonnes per year to 126 million.
Qatar is increasingly courted by Europeans since the end of purchases of Russian gas linked to the war in Ukraine. (Here, in Lubmin, Germany, the receiving station of Nord Stream 2, a project led by the Russian giant Gazprom and suspended after the invasion of Ukraine.)
© / afp.com/John MACDOUGALL
Qatar – who built his fortune on the sale of liquefied natural gas [GNL] – does he consider the gradual transition to clean energy to be a problem?
No, since we consider that we have a role to play in this transition. Remember that in 2022 coal consumption will reach its highest level in the history of humanity. However, coal emits twice as much CO₂ as gas. Therefore, enabling a transition from coal to gas is a way to reduce our CO₂ emissions globally. And, for that, you will need a lot of gas. Anyone who tells you that you can get rid of gas tomorrow and that you have an alternative is just paying lip service to you. It’s sexy for elections, but that’s it.
So you are not afraid of a drop in demand for gas thanks to the development of renewable energies?
No, because the intermittent nature of certain renewable energies still poses difficulties. When it comes to wind power, the wind sometimes stops blowing. And the same goes for solar energy, which does not work all the time, especially at night. In addition, electricity storage capacities are not sufficiently advanced to solve this problem. There are certainly batteries for electric cars, but no equipment is sized to meet the needs of a city or a country.
It therefore remains necessary to have a stable source of energy. Two options are on the table: nuclear power – for countries that can afford it and whose populations are ready to accept it – or gas. So I think that gas will remain necessary for at least a hundred years. It is impossible to get rid of it today. Reducing CO₂ emissions will involve abandoning coal in favor of gas. And, by accompanying this switch to gas with compensatory measures, such as CO₂ sequestration, it is possible, in my opinion, to make it a relatively clean form of energy.
How do you see the price of gas evolving over the next two years?
It’s difficult to predict exactly, but to get an idea, you have to look at supply and demand, since that’s what determines prices. One of the problems that I have been warning about for several years is that pressure from environmentalists, in certain countries, is pushing banks to reduce loans granted to projects linked to extraction activities. However, if there is less investment in this sector, existing deposits are condemned to decline. Ultimately, supply may no longer be sufficient to meet demand: which could increase the risk of a price shock. In my opinion, we should therefore support responsible development of gas projects, in order to maintain sufficient supply on the markets, and prevent prices from skyrocketing.
Today, nearly 74% of your gas exports are destined for Asia. Do you think that competition could begin between Europe and Asia for Qatari gas?
It has already started. Today, everyone wants to sign contracts quickly, because everyone is aware that competition is strong and that global supply will become scarce in the future. And, if you look at Asia, its population growth rates far exceed those of Europe. Future demand will therefore be much greater. In addition, the emergence of a middle class in India and China over the coming years will significantly increase the energy demand of hundreds of millions of people.
The future therefore has very significant energy needs in store for us, which must be met equitably among all the inhabitants of the planet. If, in the long term, we aspire to balance our exports between Asia and Europe – to reach a ratio of 50/50 – everything will ultimately depend on the agreements we manage to conclude. And, for the moment, we sign more contracts with Asia than with Europe.
In May, at a forum in Doha, you declared that “the worst [était] to come” for Europe with regard to oil and gas, considering that the relatively mild winter of 2022-2023 had avoided greater difficulties. Do you maintain this prediction for next winter?
Yes, because even if stocks are full today, a cold winter risks putting them at risk. And it will be difficult for Europeans to fill them, to the extent that we will have to wait until 2025-2026 before the volumes delivered by the United States or Qatar increase significantly. I don’t think it will go so far as to cause shortages, but, if your reserves are stretched and there aren’t enough supplies, then prices will go up.
Isn’t this forecast above all a way of putting pressure on the Europeans to push them to sign long-term contracts with Qatar? what some people are reluctant to do?
No, I’m not putting pressure on anyone. If European countries want to buy gas, they can do so. Selling gas has never been a problem for us. What matters are the conditions we agree on. For us, a long-term contract is fifteen years or more. But, if someone wants a short-term contract, they can come to us. If we can find a mutually satisfactory agreement, then we can do it. In November 2022, we signed a fifteen-year contract with Germany for the delivery of 2 million tonnes of gas per year. After this date, the Germans say they want to switch to hydrogen. But I am convinced, for my part, that they will buy gas, and perhaps more than today.
Qatar and the French company TotalEnergies signed on Wednesday 11 October two LNG supply agreements lasting twenty-seven years. This long-term commitment is a victory for Doha…
No way. This is more of a success for both parties than a victory for just one or the other. When two parties agree on this type of long-term contract, it is to meet their respective needs. There could be no agreement if both parties did not benefit from it over time.