EU will return to Russian gas, Qatari minister predicts

Qatar Energy

• Al Kaabi says countries will eventually achieve market equilibrium
• But governments must invest more in gas to replenish back-up supplies
• Qatar and UAE both expanding their focus on the gas market

Europe will eventually return to imports of Russian gas but with reduced dependence, Qatar’s energy boss has predicted.

The European Union imposed sanctions on Russian oil imports in March last year in response to Moscow’s invasion of Ukraine, pledging to wean itself off Russian energy. The sanctions were intended to limit Russia’s financing ability for the war.

European energy prices have risen by more than 400 percent since the war began, owing to the lower supplies from Russia.

• ‘We cannot replace Russian gas’, says Qatar Emir
• UAE says trans-country natural gas pipelines must for energy security
• Gulf oil CEOs attack ‘unrealistic’ energy transition goals

Speaking on a panel at the Atlantic Council Global Energy Forum this weekend, Saad Al Kaabi, Qatar’s minister of energy and CEO of state-owned QatarEnergy, said that gas is still a destination – and not a transition – fuel.

He said it requires continued investment to ensure supply security and affordable prices during the global transition to green.

“I think market equilibrium will be achieved by hopefully some kind of mediation or truce, or some kind of a political solution where Russia and Europe get things sorted out. And the sooner the better,” he said. 

“This situation will not last forever. I understand that the Europeans today are saying there is no way they’re going back to Russian gas. But we’re all blessed to be able to forget and to forgive. And I think things get mended with time.” 

The minister said, however, that nations with a very high dependence on Russia are likely to diversify their mix.

“They will learn from that situation, and probably have a much bigger diversity,” he said. 

“But Russian gas is going to come back, in my view, to Europe.”

Russia supplied the EU with 40 percent of its natural gas in 2021. Germany, Europe’s largest economy, was the largest importer in 2021, followed by Italy.

Qatar’s gas has become crucial to Europe as it struggles to find a solution to reduce its reliance on Russian supply. Historically, Doha’s biggest market for energy has been Asia, but it also supplies to Europe through long-term agreements and on the spot market.

Al Kaabi warned that market volatility could last for years and that governments must increase investments in gas to replenish back-up supplies.

He said that due to the warmer weather Europe has not had a very high demand for gas so far.

“The issue is what’s going to happen when they want to replenish their storages this coming year, and there isn’t much gas coming into the market until 2025, 2026 and 2027,” Al Kaabi said. “So I think it’s going to be a volatile situation for some time.

“If governments and legislators do not promote additional gas investments, if I am being very selfish that’s good for us. But it’s not good for development. I think that gas is a destination fuel until we have a realistic solution that can do away with it.”

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Growing the gas market

Qatar, the world’s largest liquefied natural gas producer, is working to expand its gas output, but has limited volumes going to Europe.

The UAE, an Opec oil producer, is also expanding its focus on the gas market.

Speaking on the same panel in Abu Dhabi, UAE minister of energy and infrastructure Suhail Al Mazrouei agreed that gas will be needed “for a very long time”, even as renewable energy is installed.

“Gas has to be available, and it has to be affordable to secure, and to become, a base load that helps the renewable energy and helps clean up the environment and reach the Cop goals,” Al Mazrouei said.

He affirmed the UAE’s commitment to ensuring a balanced oil market in line with its plan to advance the five million barrels per day production target to 2027.

“We will do the investments. But I think the whole world needs to think about the resources and how we enable the national and international oil companies to produce more gas to make it available and affordable.”

Al Mazrouei added that Gulf state-owned companies have also been investing in technologies to reduce methane emissions. 

“If we compare the carbon intensity of what we produce as a barrel here and you compare it with barrels elsewhere, we probably have the cleanest barrels or the greenest barrels you can find,” he said. 

The Emirati minister also said that the world requires more trans-country natural gas pipelines, such as the Dolphin gas pipeline, a natural gas project between Qatar, the UAE and Oman that was the first of its kind to contribute to improved energy security and integration among Gulf countries.