Expansion of The Qatar Gas Market, Savior of the European Energy Crisis

Responding to the western sanctions on Russia for invading Ukraine, Qatar and Germany have agreed to an LNG (Liquified Natural Gas) supply agreement for a long period of 15 years which will start in 2026. LNG is natural gas that has been converted into a liquid. This is done to save space, because 610 cubic feet of natural gas can be converted into 1 cubic foot of LNG. Converting natural gas to LNG makes it easier to store and easier to transport when pipelines are not available. The refrigeration process is used to condense natural gas into LNG by cooling it to minus 260 degrees Fahrenheit. This cooling process is usually accompanied by a process of removing water, carbon dioxide, hydrogen sulfide and other impurities (Setiadi, 2017). Natural gas is an important part of the solution in the energy transition, especially as the world strives to eliminate energy-poverty. Energy demand growth over the next few decades will be substantial, and LNG supplies will be essential to meeting this demand.

In 29th November 2022, Qatar Energy and ConocoPhillips have signed an agreement to ship 2 million tons of LNG per year from Qatar to Germany from 2026. Qatar Energy is a state-owned public corporation responsible for all phases of the oil and gas industry in the State of Qatar. As a fully integrated energy corporation, they cover the full spectrum of the oil and gas value chain from exploration to production, from processing and refining to sales and delivery. As stewards of Qatar's natural resources and the world's largest provider of LNG, their strength rests in their ready access to Qatar's unique reserves to provide energy that fuels social and economic prosperity.

Meanwhile, ConocoPhillips Company is an American multinational energy company with its headquarters located in the Energy Corridor district of Houston, Texas in the United States. It is a pure exploration & production company as well as the world's largest independent player and also a Fortune 500 company. ConocoPhillips was created through the merger of Conoco Inc and Phillips Petroleum Company on August 30, 2002 and was the fifth largest oil company integrated until rotating off downstream assets to Phillips 66.

This company has a branch in Qatar, namely ConocoPhillips Qatar. In 2003, ConocoPhillips and Qatar Petroleum signed a Heads of Agreement to develop Qatargas 3, a large-scale liquefied natural gas (LNG) project in Ras Laffan Industrial City, Qatar. ConocoPhillips holds a 30 percent interest in this integrated project comprising approximately 1.4 gross BCFD of natural gas production over the 25 year life span of the project, as well as an initial average volume of approximately 70 gross MBPD of liquefied petroleum gas and condensate combined from Qatar's North field (ConocoPhillips, 2022)

His Excellency Saad Sherida Al-Kaabi, the Minister of State for Energy Affairs, and President and CEO of QatarEnergy, and Ryan Lance, chairman and chief executive officer of ConocoPhillips, signed the LNG sale and purchase agreements during a special ceremony held at QatarEnergy's headquarters in Doha in the presence of senior executives from both companies.

Saad al-Kaabi said the deal would provide Germany with 2 million tonnes of LNG annually, arriving from Ras Laffan in Qatar to an under-construction northern Germany's Brunsbuettel LNG terminal. "(The agreement) marks the first long-term LNG supply agreement to Germany, with a supply period extended for at least 15 years, thereby contributing to Germany's long-term energy security," Saad al-Kaabi said during a joint press conference with ConocoPhillips CEO Ryan Lance.

"By 2027, we estimate Germany's gas consumption will be around 73 bcm annually so this deal could cover around 3.7 percent of that," said Kaushal Ramesh, senior LNG analyst at Rystad Energy. "This is not unimportant volume and is a big step in diversifying supply," he added (CNN, 2022).

"QatarEnergy and ConocoPhillips are excited for the opportunity to responsibly and securely supply world markets with LNG from the Qatari expansion projects," said Ryan Lance. "These agreements will provide an attractive LNG offtake solution for our new joint ventures with QatarEnergy and position the joint ventures as reliable sources of LNG supply into Europe."

"This is the culmination of efforts between two trusted partners, QatarEnergy and ConocoPhillips, over many years, to provide reliable and credible LNG supply solutions to customers across the globe, and today, to German end-consumers," said His Excellency Minister Al-Kaabi. "Germany is the largest gas market in Europe, with significant demand in the industrial, power, and household sectors, and we are committed to contribute to the energy security of Germany and Europe at large."

Qatar's gas will not arrive early enough to help Germany avoid energy shortages this winter and, potentially, the winter after. At present, Germany is confident it can avoid power outages this winter but is less confident that it will have the reserves to avoid power cuts or rationing in 2023-24 (The Guardian, 2022)

Qatar Energy previously had clients in the Asian continent. However, the presence of new clients in Europe does not make them cut off supplies to Asia to be given to Europe. Qatar Energy CEO Saad Al-Kaabi said Qatar Energy is working to expand its gas production and trading operations as global demand soars.

"Qatar is really committed to the contract. So when we sign (contracts) with an Asian buyer or a European buyer, we stick to that deal. So the volume that's going to Europe is what's set. We're not going to take from the Asian buyer for sent to Europe, that's not going to happen," Al-Kaabi said

Through its joint ventures with Qatar Energy, ConocoPhillips holds a 3.125% interest in the NFE project and a 6.25% interest in the NFS project. The company has agreed to terminal services for a 15-year period at the German LNG Terminal (ConocoPhillips, 2022).

The five import facilities leased by the German government will cost a total of 6.5 billion (US$6.7 billion) over the next 10 to 15 years. Once operational, they will be able to meet about a third of Germany's current gas demand (Larasati, 2022)

German has been one of the countries most critical at the World Cup of Qatar's treatment of LGBTQ people, as well as the labour conditions of workers building the football stadiums. But the economics minister Robert Habeck, a Green party member, has also said that, faced with a need to wean itself off Russian gas supplies, German has to take its energy from a variety of sources.

Habeck visited Doha in March, but disputes over the length of the contract delayed an agreement, with Qatar preferring a 25-year contract and Germany seeking something much more short term. He said on Tuesday: "Fifteen years was great. They look like good conditions to me." (The Guardian, 2022)

European Commision, 2022

As is generally known, the majority of the EU's natural gas is supplied by only three external producers: Russia, Norway, and Algeria. Russia is by far the largest gas supplier to the continent, contributing 37.7% of the total gas imported by the EU 27 in 2005. In general, the dependence on Russian gas imports increases the further east one travels in Europe, to the point that seven former Warsaw Pact and Soviet Union member states in Europe import more than 99% of their natural gas from Russia. Nearly all of the nations in Central and Eastern Europe rely on Russia for the majority of their natural gas needs. Other suppliers of gas (apart from Russia) to the EU are Norway (over 22% of imports in the first half of 2022) and Algeria (over 10% in the first half of 2022). LNG accounted for over 25% in the first half of 2022 - mainly from the US, Qatar and Nigeria (European Council, 2022)

In 2021, the EU imported 83% of its natural gas. Since Russia's invasion of Ukraine, gas imports from Russia to the EU have been significantly reduced. This has mainly been compensated for by a sharp increase in imports of liquified natural gas (LNG), particularly from the US.

And now, Russia has stopped the flow of gas in a pipeline carrying gas to Europe. Moscow previously reasoned that the stoppage of the flow of the gas pipeline was only due to 10 days of maintenance to Nord Stream 1. However, this made European countries concerned. This is because stopping the flow of Russian gas through Nord Stream 1 could threaten Europe with a gas crisis. Because as you know, the Nord Stream 1 Pipeline transports 55 billion cubic meters (bcm) of gas per year from Russia to Germany under the Baltic Sea.

As European countries have supported Ukraine after Russia's invasion in February, Moscow has slashed supplies of natural gas used to heat homes, generate electricity and power industry. That has created an energy crisis that is fueling inflation and increasing pressure on companies as prices have risen.

Previously, Ukrainian President Volodymyr Zelenskyy also gave a warning to Europe. He said the continental group needed to prepare for the possibility that Russia cut gas supplies. "Russia has never played by the rules in energy. It will not play unless it shows its strength," Zelenskyy said (CNBC, 2022)

However, after the signing of the agreement, the European side had to face a threat from Qatar that they would withhold gas exports to the European continent. The choice was made as Belgian authorities were looking into claims of corruption at the European Parliament (EP) in Brussels. Several media outlets have reported that Qatar is complicit in the wrongdoing. Belgium therefore decided to restrict Qatar's interaction with the organization as a result. Qatar were irate as a result.

"Qatar has strong and long-standing relations with many countries in the EU, and we express our gratitude to those who have shown their commitment to these relations during the current wave of attacks on our country," the diplomat said.

            It is important to understand that the corruption scandal involving PE and Qatar began when the sole Yunani representative in the parley, Eva Kaili, was arrested. Since 9 December, he has been detained by Belgian police for participating in criminal organizations, money laundering, and corruption. According to a report by Euronews, Kaili engaged in illegal lobbying to destabilize Iran, which Belgian media misidentified as Qatar. It will serve as the official residence of FIFA World Cup 2022.

The legislator was reportedly 'caught red-handed', where there was evidence in the form of cash of 600,000 euros, 150,000 euros and several hundred thousand euros in a suitcase in a hotel room. This situation led to the revocation of his parliamentary immunity (CNBC, 2022).

            Given this threat, Europe should maintain good relations with Qatar if the country wants to survive under the energy crisis which also affects the economic crisis.

In this context, the conversation given by all the actors who have given their statements, is an example of a speech act in the Copenhagen School in international relations theory studies. The Copenhagen School originates from a research project on a critical review of the concept of security at the Copenhagen Peace Research Institute funded by the Fritz Thyssen Stiffung -Frits Thyssen Foundation- and involving security experts including Barry Buzan, Ole Waever, and Jaap de Wilde. The concept of securitization of the Copenhagen School offers a comprehensive understanding of security that combines military elements with other elements such as economic, social, political, environmental and so on. In this regard, securitization can be defined as a statement (speech act) made by certain securitizing actors (usually government officials) to convince the public that a referent object is facing a serious threat and must be handled with extraordinary actions. The statement continues to be made until it exceeds the threshold.

In the perspective of the Copenhagen school, the concept of security is a statement by an agent (security as a speech act) in which the decision to determine something as a security issue is determined by a statement (speech act) by someone who has broad influence or a public figure. Securitization is a step to make security issues in the public and private domains. The ability of securitizing actors to convince the public that an object is facing a threat that can be fatal if not handled immediately (Hadiwinata, 2017)

The statement (speech act) must be able to convince the public that the object of reference is facing a threat. In this case, the selection of appropriate political jargon and terminology by securitizers is very important. In addition, the completeness and accuracy of the data is an important element in the speech act context. This explains that although theoretically securitization is not the exclusive territory of government officials, many cases show that the success of securitization is in the hands of government officials because of the authority and availability of data in support of the speech acts made (Hadiwinata, 2017)