Germany close to a long-term LNG agreement with Qatar

German utilities RWE (RWEG.DE) and Uniper (UN01.DE) are close to striking long-term deals to buy liquefied natural gas (LNG) from Qatar’s North Field Expansion project to help replace Russian gas, three sources familiar with the matter told Reuters.

The agency reported yesterday that talks between Germany and Qatar have been fraught with differences over key conditions such as the length of contracts and pricing, but the industry sources, who spoke on condition of anonymity, said the parties were expected to reach a compromise soon.

One of the sources said the talks were now more constructive than a few months ago. Another source said the utilities were likely to agree to 15-year deals, while a third source said a deal could be reached within weeks.

In May Reuters reported that the talks had run into difficulties because Germany was reluctant to commit to deals for at least 20 years and also wanted prices linked to Dutch benchmark gas prices, rather than oil.

Germany, Europe’s biggest economy, aims to replace all Russian energy imports by mid-2024, a Herculean effort for a country that mainly relies on natural gas to power its industry.

READ: EU opens office in gas-rich Qatar amid energy crisis

While supply deals with Qatar would be positive for Germany, they would not offer an imminent solution to Berlin’s energy crisis as the vast North Field Expansion project is not expected to come online before 2026.

Qatar Energy did not immediately respond to a Reuters request for comment.

Uniper told Reuters on Monday that it remained in talks with Qatar but had not reached a deal. “Uniper is currently working hard to diversify its sources of gas supply. Qatar also plays an important role in this,” it said.

RWE told Reuters it was in “good and constructive” talks with Qatar.

Russian gas meets about 50 per cent of Germany’s needs, according to the German Economy Ministry’s website.