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With a proven resource of 23.8 trillion cubic meters, Qatar has the second-largest gas reserve in the world behind Russia making it a major player in the global gas market. With a production of 171 billion cubic meters, it ranks fourth in the globe behind China, Russia, and the United States. Among the nations that export hydrocarbons in the Middle East and North Africa, Qatar takes the lead.
Despite currently occupying a leading position, all studies and analysis indicate that Qatar continues to have a significant potential for growth in the energy markets. Qatar will be the top gas producer and exporter internationally by 2026 as a consequence of its efforts to increase its own production rate, according to a report by the International Gas Union’s Global LNG.
Qatar’s role in the war over energy resources
Europe’s interest in Qatar is growing as it fights a protracted energy battle with Vladimir Putin. In order to compel European countries into giving up their financial and military backing for Ukraine against Russia’s invasion, Moscow is curtailing natural gas supplies to Europe.
While the conflict in Ukraine continues on the ground, the European Union is continuing to hold its ground and is actively working on reducing its dependency on Russian natural gas before the oncoming winter. This makes Qatar the obvious counterbalance to Russia’s monopoly on the natural gas supply to Europe.
As winter approaches, Qatar is most likely able to make up for the gap in gas imports since it supplied 21% of Europe’s energy demands last year, ascending to the position of the continent’s second-largest gas provider. In order to make up for the decline in Russian gas, which provided 18% of Europe’s yearly gas needs in 2021, additional Qatari liquefied natural gas is expected to be supplied.
Previously, the cheaper Russian gas that entered through direct pipelines was able to compete with the LNG exported from Qatar and the United States to Europe. Despite the high cost of shipment, LNG imports remain a viable option given the current energy crisis and Europe’s urgent need for gas before the winter.
European initiatives towards Qatar
The aforementioned factors prompted European countries to continue collaborating with Qatar on energy sector developments. Recently, France’s Total Energy signed a cooperation agreement with Qatar Energy for 1.5 billion dollars, making it the largest stakeholder and granting it 9.3% of Qatar’s North Field. Additionally, Total Energy resumed investing in the Qatari market by acquiring 6.25% of the North Field in a $2 billion deal.
It is evident that France intends to progressively increase its financial involvement in the gas fields of Qatar. As a result, Qatar will be able to increase its production capacity, enhancing the energy security of Europe. Subsequently, France will have increased control over Qatar’s gas output, which will enable Doha to expand its exports to the European market.
France has been diplomatically preparing to increase its investments in Qatar since last December. A memorandum of understanding concerning development and economic growth was signed between the two countries during the visit of French President Emmanuel Macron to Qatar in 2021. These diplomatic actions represented the beginning of France’s earnest search for alternatives to Russian natural gas.
The EU was also undertaking similar actions. To improve diplomatic ties between the EU and Qatar, its delegation offices were inaugurated in Doha in September. This allowed the EU to designate a chief of mission and an ambassador in the country with the intention of developing long-term strategic agreements with the government of Qatar. On the sidelines of the inauguration mission Charles Michel, President of the European Council, explained the relationship between this effort and the difficulties in the energy sectors as well as the desire of European authorities to explore this issue further.
Germany followed a similar course, establishing a long-term energy cooperation with Qatar that will diversify its energy supply. In-progress talks with Germany for long-term LNG exports were eagerly anticipated by Qatar Energy. Qatari Emir Sheikh Tamim bin Hamad Al Thani pledged to increase his country’s gas supply to Germany in an effort to ease the continuing energy crisis in Europe.
Infrastructure requirements for receiving Qatari gas
Qatari natural gas will temporarily make up for the supply constraint thanks to the European nations’ success in developing their strategic understanding with Qatar in the energy sector. Making the most of Qatari gas, however, necessitates taking a few more measures, such as stepping up spending on the construction of European LNG import terminals.
Moscow had the edge since it could directly transmit Russian natural gas, in its unprocessed condition, through a straightforward pipeline to customers or power plants. To be pumped via European pipelines, LNG from Qatar and the United States must be received at import terminals and converted back into a gaseous state.
The first country to recognize this was Germany. Prior to the crisis, it increased its imports of American and Qatari gas by investing in four floating liquefied gas terminals, following the lead of other European nations like France. Because it takes time to build enough floating LNG terminals, Europe anticipates addressing import chain gaps in a few months and weaning itself off Russian gas in the process.
All of these actions will provide Qatar the chance to boost its long-term LNG export profits while also giving Europe the best possible chance of surviving the winter. Most crucially, Qatar will acquire a stronger position in the area and more sway over its European allies.
Other Gulf nations like the UAE, which recently finalized an agreement with Germany to pursue projects of mutual interest in the energy sector, will benefit from this surge in cash and political clout.