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ENERGY

Germany may place caps on gas use in winter, warns minister

As Russia continues to stem the flow of gas into Europe, the German Economics Minister believes emergency measures may have to be in place over winter.

Economics Minister Robert Habeck
Economics Minister Robert Habeck (Greens) gives a talk in Denmark on June 25th. Photo: picture alliance/dpa/Ritzau Scanpix Foto | Bo Amstrup

Economics Minister Robert Habeck (Greens) has warned that the government may have to step in to regulate gas usage if there are shortages this winter.

Over the colder months there is a “medium-term” threat of a scenario in which “reductions (in gas usage) will actually have to be imposed by law,” Habeck said before a meeting with other EU energy ministers in Luxembourg on Monday.

Such a reduction would lead to “a severe economic crisis” in Europe and Germany, he said. 

The minister did not say who exactly could be affected by reductions.

READ ALSO: German environmentalists call for caps on energy usage

He said this would depend on the specific situation and how cold the winter would be, where there were “regional supply bottlenecks” and on calculations about which industries were involved in different supply chains.

At the same time, Habeck stressed that “solidarity-based” and “very quick action” was necessary to avoid such a scenario.

Aid alliance with EU neighbours

In order to avoid caps on gas usage, the rapid expansion of renewable energy sources and the increase of energy efficiency “could be decisive components”, Habeck added.

At the meeting in Luxembourg, the EU energy ministers are discussing these two issues as parts of the EU’s planned “Fit for 55” climate package.

EU Energy Commissioner Kadri Simson, who is attending the meeting, said that 12 of the 27 member states – including Germany – are currently receiving less gas from the Russian energy company Gazprom. 

Though Gazprom has claimed that the reductions in gas supply to Germany are due to repairs on the Nord Stream 1 pipeline, Berlin has accused the Kremlin of using gas as a ‘weapon’ to punish allies of Ukraine. 

READ ALSO: ‘Scarce commodity’: Germany raises gas alert level as Russia reduces supply

In the event of a crisis this winter, the government said it would form an aid alliance with neighbouring countries such as the Czech Republic, Austria, Poland and also France.

“We would not make any progress at all if we could not fall back on France, Belgium, the Netherlands and Norway, who are supporting us,” said Habeck.

Algeria is also increasing the quantities of gas supplied via Italy.

“We are dependent on solidarity here,” said the Green politician.

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ENERGY

Qatar agrees to ‘long-term gas supply’ deal with Germany

Qatar has agreed to send Germany two million tons of liquefied natural gas a year for at least 15 years, officials said Tuesday, as Europe's biggest economy scrambles for alternative supplies after Russia's invasion of Ukraine.

Qatar agrees to 'long-term gas supply' deal with Germany

Qatar’s Energy Minister Saad Sherida al-Kaabi said up to two million tons of gas a year would be sent for at least 15 years from 2026, and that state-run QatarEnergy was discussing other possible deals for Europe’s biggest
economy.

Kaabi, who is also QatarEnergy’s chief executive, said so many European and Asian countries now want natural gas that he did not have enough negotiators to cope.

The talks for the latest deal took several months as Germany has resisted the long-term contracts that Qatar normally demands to justify its massive investment in the industry.

Russia’s invasion of Ukraine in February increased pressure on the German government to find new sources. And the latest deal will not help the country get through the looming winter.

The gas will be bought through US firm ConocoPhillips, a long-term partner with QatarEnergy, and sent to a new terminal that Germany is hurrying to finish at Brunsbuttel.

“We are committed to contribute to the energy security of Germany and Europe at large,” Kaabi told a press conference after the signing ceremony with ConocoPhillips chief executive Ryan Lance.

Lance hailed the accord as “a vital contribution to world energy security”.

READ ALSO: EXPLAINED: What are Germany’s alternatives to Russian gas?

Qatar last week announced a 27-year agreement to ship four million tons a year to China. It said this was the longest contract agreed in the industry.

Qatari officials would not discuss prices but industry analysts have said Germany will have to pay a premium for the shorter contract and the hurried start to deliveries.

Intense demand

Kaabi again stressed the “sizeable investments” that his country has made in extracting gas for deliveries around the world.
But he also said that Qatar was negotiating with German companies to further increase the “volumes” being sent.

The gas will come from the North Field East and North Field South projects that Qatar is developing with ConocoPhillips and other energy multinationals.

North Field contains the world’s biggest natural gas reserves and extends under the Gulf into Iranian territory.

Through expansion in North Field, Qatar is aiming to increase its production by 60 percent by 2027. With increases in international prices, the value of its exports has almost doubled in the past year, state media said
recently.

Asian countries led by China, Japan and South Korea have been the main market for Qatar’s gas, but it has been increasingly targeted by European countries since Russia’s war on Ukraine threw supplies into doubt.

“There is very intense discussions with European buyers and with Asian buyers,” Kaabi said, highlighting the “scarcity of gas coming in the next few years”.

“We do not have enough teams to work with everybody, to cater for the needs” of all countries making demands.

Kaabi said the deal with China’s Sinopec showed that “Asian buyers are feeling the pressure of wanting to secure long-term deals… I think we are in a good position.”

The Brunsbuttel terminal supplies customers of German energy companies Uniper and RWE, and Economy and Energy Minister Robert Habeck said the two firms “have to buy on the world market.

“It is clear that the world market has different suppliers, and it is smart from the companies to buy the most favourable offers for the consumers on the world market, and that includes Qatar.

“But this is not the only supplier on the market.”

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