# Exclusive-Germany, Qatar at odds over terms in talks on LNG supply deal -sources Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-05-09 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Germany and Qatar face hurdles over long-term LNG deals - Meta Description: Germany and Qatar face challenges in negotiations over long-term LNG supply contracts, with differences on contract duration and destination clauses. URL: https://financedigest.com/exclusive-germany-qatar-at-odds-over-terms-in-talks-on-lng-supply-deal-sourceshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-05-09t172202z2lynxnpei480ukrtroptp4ukraine-crisis-germany-qatar-1736815761482-compressed.jpg) By Marwa Rashad, Andrew Mills and Christoph Steitz LONDON (Reuters) – Germany and Qatar have hit difficulties in talks over long-term liquefied natural gas (LNG) supply deals amid differences over key conditions, including the duration of any contract, three people familiar with the discussions told Reuters. Germany, which aims to cut its carbon emissions by 88% by 2040, is reluctant to commit to Qatar’s conditions to sign deals of at least 20 years to secure the massive LNG volumes it needs to reduce its dependence on Russian gas, the people said. Qatar, the world’s largest LNG supplier, is also specifying terms such as a destination clause that would prevent Berlin from rerouting the gas to other areas in Europe, a condition which the [European Union](https://www.financedigest.com/lisk-announces-lsk-token-listed-on-bitflyer-the-european-unions-newest-crypto-exchange.html "Lisk announces LSK token listed on bitFlyer, the European Union’s newest crypto exchange") opposes. The tough talks between Qatar Energy and German utilities highlight the [challenges the EU faces in its ambition to diversify away from Russian gas as the German government struggles to balance any deal](https://www.financedigest.com/how-to-deal-with-challenging-employees.html "How to Deal With Challenging Employees?") with its carbon reduction targets. [Germany consumes](https://www.financedigest.com/germany-to-lower-sales-tax-on-gas-to-7-in-bid-to-relieve-consumers.html "Germany to lower sales tax on gas to 7% in bid to relieve consumers") around 100 billion cubic meters (bcm) of natural gas annually, with around 55% of that coming from Russia and smaller volumes piped from Netherlands and Norway. It has backed the construction of two LNG terminals and has rented four floating storage and regasification units (FSRUs) as a stop-gap measure. What it needs now is the actual LNG. The issue of LNG contract length potentially putting Germany’s decarbonisation [targets at risk](https://www.financedigest.com/britains-tax-take-risks-blowing-green-energy-off-target.html "Britain’s tax take risks blowing green energy off target") is part of the ongoing discussions with Qatar,” one of the people said, adding Germany was also competing with other nations for LNG from Qatar. Another source said that securing LNG [supplies form Qatar “is not expected](https://www.financedigest.com/gsk-expects-us-launch-of-rsv-vaccine-with-no-supply-issues.html "GSK expects US launch of RSV vaccine with no supply issues") to happen soon. Qatar’s government communication office declined to comment on ongoing negotiations. Germany’s Economy Minister was not immediately available for comment. Qatar is also firm on oil-indexation, linking the contracts to [oil price](https://www.financedigest.com/oil-prices-steady-after-u-s-stockpile-swell.html "Oil prices steady after U.S. stockpile swell"), which represents the pricing structure of their alternative sales into Asia, while the Germans are seeking linkage to the Dutch TTF benchmark, Felix Booth, head of LNG at energy intelligence firm Vortexa, said. Qatar is in the [driving seat](https://www.financedigest.com/in-the-driving-seat-reshaping-the-cfo-role-in-2017.html "In the driving seat: Reshaping the CFO role in 2017") in these discussions, with a new project underway, strong interest in their volumes and a long history as a reliable supplier,” Booth said. To secure this supply, it is [expected that the German](https://www.financedigest.com/german-businesses-expect-only-mild-recession-as-disruptions-ease.html "German businesses expect only mild recession as disruptions ease") team will need to accept a traditional oil linked pricing structure. Leaving the [European buyer with significant financial exposure compared to the European hub](https://www.financedigest.com/jaguar-land-rover-opens-three-european-self-driving-tech-hubs.html "Jaguar Land Rover opens three European self-driving tech hubs") prices,” he added. QUID PRO QUO [German Economy Minister](https://www.financedigest.com/german-minister-says-on-right-track-to-solving-co2-emitting-car-row.html "German minister says ‘on right track’ to solving CO2-emitting car row") Robert Habeck in March visited Qatar, along with officials from German utilities RWE and Uniper, to discuss procuring additional volumes but no deal has been agreed so far. RWE, Germany’s largest power producer, in 2016 struck a deal with Qatargas, a [unit of Qatar Energy](https://www.financedigest.com/germans-told-to-unite-over-energy-crisis-amid-eu-divisions.html "Germans told to unite over energy crisis amid EU divisions"), under which up to 1.1 million tonnes of liquefied natural gas will be delivered to Northwestern Europe annually by the end of 2023. RWE declined to comment on the talks. Uniper also declined to comment, saying only that its ties with Qatar go [back a long way and that it hoped to be able to build](https://www.financedigest.com/reckon-one-builds-momentum-with-strong-backing-from-accountants-joining-the-cloud-advisor-programme.html "Reckon One builds momentum with strong backing from accountants joining the Cloud Advisor Programme") on that relationship. German gas companies will be back to Qatar in May to [resume talks](https://www.financedigest.com/japan-insurers-in-talks-with-reinsurers-to-resume-coverage-in-russian-waters.html "Japan insurers in talks with reinsurers to resume coverage in Russian waters"), two separate people familiar with the process said. They said that Emir of Qatar, Sheikh Tamim bin Hamad Al Thani, will visit Germany in the second half of May to [sign a partnership agreement](https://www.financedigest.com/japan-uk-to-sign-reciprocal-access-agreement-for-military-officers-yomiuri.html "Japan, UK to sign reciprocal access agreement for military officers -Yomiuri") between the two countries. However, this does not mean that long-term LNG deals will be concluded, as the partnership is aimed at [paving the way](https://www.financedigest.com/soft-lending-and-inflation-data-pave-way-for-smaller-ecb-hike.html "Soft lending and inflation data pave way for smaller ECB hike") to significantly ramp up long term Qatari LNG deliveries to Germany, they added. Qatar’s sovereign [wealth fund](https://www.financedigest.com/norway-wealth-fund-employee-sues-for-workplace-gender-discrimination.html "Norway wealth fund employee sues for workplace gender discrimination"), the QIA, has around $20 billion invested in Germany, with stakes in Volkswagen and Deutsche Bank. Germany hopes for a possible two-way partnership with Qatar where German companies such as Siemens Energy and others could help Doha with its attempts to put into action a sustainability [plan it launched late last year](https://www.financedigest.com/3-factors-to-plan-for-in-2017-a-year-like-none-other.html "3 Factors to Plan for in 2017, A Year Like None Other"). There needs to be a gentlemen’s agreement between the Qataris and [German companies, that LNG should only be the first step in a longer collaboration between the two countries,” said one of the people, a German industry source](https://www.financedigest.com/german-new-passenger-car-registrations-up-3-in-august-industry-source.html "German new passenger car registrations up 3% in August – industry source"). (Reporting by Marwa Rashad in London, Andrew Mills in Doha and Christoph Steitz in Frankfurt; Additional reporting by Markus Wacket in Berlin; Editing by Veronica Brown and Alexander Smith) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---