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US, Qatar discuss gas supply to EU in event of Russia invading Ukraine

The US and Qatar have been discussing natural gas supplies to the EU Amid concerns over the possibility of a new Russian military assault against Ukraine which could disrupt gas supplies to Europe

January 22, 2022 at 4:48 pm

The US is in talks with Qatar over gas supplies to Europe in the event of an invasion of Ukraine. With growing fear in Europe that Moscow will weaponise gas supplies to the continent, discussions are taking place as part of a contingency measure in the event of a shortfall.

Talks with Qatar, the world’s largest producer of liquefied gas (LNG), US and EU member states, focused on securing additional supplies. However, officials cited in the Financial Times, warned that there was no “magic wand” to solve the potential shortfall with the continent already in the grip of an energy crisis.

Read: Russia, Ukraine mulling Turkey mediation, sources say

Europe has seen gas prices rise dramatically over recent months triggering a crisis in the cost of living. The fallout from an invasion of Ukraine by Moscow is sure to exacerbate the crises.  With Russia being western Europe’s largest single supplier of gas, the US and its allies in Europe have very few options to apply leverage over Moscow. Europe’s reliance on Russian gas has also complicated efforts to present a united front against Moscow’s threats.

Qatar is seen as a genuine alternative for the Europeans to replace Russia as a major source of LNG. While rerouting the gas supplied by Doha from its main market in Asia to Europe may not be feasible immediately there is greater scope for the Gulf state to help Europeans wean themselves of Russian gas.

“We’re looking at what can be done in preparation for an event, especially midwinter with very low [European natural gas] supplies in storage,” a senior US administration official is reported saying in the FT. “We discussed what can be moved around the market, what can help . . . the things we can prepare now for deployment if and when there is an escalated crisis.”

Another person briefed on the discussions with Doha said there was “potential to explore a long-term guarantee of LNG security, especially as Qatar will greatly increase its LNG production over the next few years.”

Read: UK’s new gas saviour during supply crunch is Qatar

A major complication for now is that most of Qatar’s LNG is shipped to Asia and China where the Gulf state’s clients agree to fixed, long-term contracts. This means that there would need to be an agreement with Asian countries to reroute existing supplies unless Qatar is able to boost its production significantly.

A senior official in the Biden administration acknowledged that contracts between LNG exporters and Asian buyers could complicate efforts to divert supplies to Europe. “There’s no magic wand,” the official said. “It’s all really hard, really complicated. Looking to do it within the constructs of how markets work, how commercial terms work, how cargoes work.”

Despite these concerns over the short term, there is a consensus that Europe must secure gas supplies from an ally and not be held hostage. Qatar is seen as a stable source for Europe’s need for LNG which could further boost the Gulf states standing.

READ: Russia, Ukraine mulling Turkey mediation, sources say