Europe’s shift towards green energy has raised concerns among experts about future energy bills and energy supply. The move has prompted energy suppliers to pivot their focus towards Asia. Qatar is a prime example of this shift, with approximately 70% of its gas production now heading east to Japan and China through long-term contracts.
According to Jamie Ingrams, a senior editor at the Middle East Economic Survey, this shift began due to lower European demand for LNG, driven in part by offshore wind and green energy adoption, along with Germany’s reliance on Russian pipeline gas.
The Fukushima nuclear disaster in Japan led to a swift departure from nuclear energy, and Qatar stepped in to provide the needed energy. China, in its quest to reduce coal dependency, became the world’s largest energy importer and increasingly turned to LNG.
Dr. Mamdouh G Salameh, an international oil economist, pointed out that Europe’s hasty transition to green energy policies started the energy crisis. The Russia/Ukraine conflict further escalated the crisis and shifted Russian energy exports from West to East, resulting in high prices due to Western sanctions against Russia.
In November 2022, China and Qatar signed 27-year deals for LNG extraction, solidifying Qatar’s focus on Asian markets. Meanwhile, the EU, heavily reliant on Russian piped gas, was forced to sign long-term LNG contracts, including one with Qatar.
Qatar’s commitment to long-term contracts was evident in its landmark deal with Germany for a 15-year LNG supply. Qatar Energy also decided to reduce its spot market gas offerings in favor of long-term contracts, prioritizing supply security and stability.
Charles Ellinas, an LNG consultant, emphasized Qatar’s determination to secure its future by meeting the global demand for LNG during the long-term energy transition. Qatar is set to significantly increase its production capacity in the coming years.
Saad Sherida Al-Kaabi, CEO of Qatar Energy, believes that LNG’s role in handling intermittent supply during the energy transition is crucial, as gas demand is expected to remain high well into the 2030s and beyond.
However, some experts, like Jamie Ingrams, believe that Europe’s stringent approach to the hydrocarbon sector risks causing short-term shortages and price spikes. They question the feasibility of Europe’s decarbonization plans.
H.E. Abdullah Bin Hamad Al-Attiyah, former CEO of Qatar Petroleum, expressed skepticism about European politicians’ commitment to climate goals. He believed that Western democracies tend to over-promise to their electorate and eventually prioritize their energy needs over climate goals.
These views align with Dr. Salameh’s assessment, who agrees that Western green policies have merit but also aim to keep oil and gas reserves underground for their governments’ future use.
As Qatar solidifies its position as the world’s leading LNG exporter, the energy crisis that began in Europe in 2021 has made European economies vulnerable to global challenges. Russia’s actions in Ukraine have further exacerbated the situation, leading Western allies to encourage Qatar to step in and provide energy.
Qatar had a successful year in 2022, securing deals with China and Germany while navigating complex global energy dynamics.