According to Germany, it has signed a long-term gas supply agreement with Qatar

Germany said it has a long-term deal with Qatar to supply liquefied natural gas, while Berlin looks for alternative energy suppliers for Russia.

Germany’s Economy Minister Robert Habeck said in Doha on Sunday as part of a Gulf tour that the deal would be a “door opener” for the country’s economy because it would reduce dependence on imported Russian gas, which currently accounts for more than half the annual supply.

He declined to give details of the amounts and other terms discussed. The ministry said it was up to individual German energy companies, whose bosses accompanied Habeck on the trip to Qatar, to conclude contracts with the Arab state’s companies.

“We may need Russian gas this year, but no longer,” Habeck was quoted as saying by the DPA in Doha. “It starts like this – so whoever has ears should start listening,” he said in a thinly veiled message to Russian President Vladimir Putin.

Qatar welcomed Germany’s decision to “accelerate” the development of two LNG terminals in a statement, saying the countries’ “respective trading companies would resume and advance talks on long-term LNG shipments from Qatar to Germany.”

Germany’s move comes as EU leaders prepare to meet in Brussels on Thursday to discuss how to respond to the shock of rising energy pricesexacerbated by the war in Ukraine and a desire to wean from Russian gas following Moscow’s invasion of Ukraine.

The government coalition in Berlin has ruled out extending the service life of the remaining German nuclear power plants, which are due to be shut down at the end of the year, and is relying on LNG terminals to reduce gas imports via pipelines from Russia.

Aside from efforts to find alternative energy sources, EU governments are trying to protect homes and businesses from rising energy costs.

On Sunday, Austria announced it would spend two billion euros to subsidize its citizens’ energy bills.

On Friday, Italy said it plans to raise 4.4 billion euros by imposing a 10 percent tax on higher profits reported by companies between October 2021 and March 2022 compared to the previous year, if that increase exceeds 5 million euros.

With the new tax, Italy aims to cut charges at the pump by 25 cents per liter by the end of April and protect the country’s 5.2 million poorest families from further increases in their household electricity bills. Energy companies likely to be affected by the tax include Eni and Enel.

“We will tax some of the extraordinary profits that companies are making thanks to the increased cost of raw materials and redistribute this money to companies and families in difficulty,” said Prime Minister Mario Draghi.

Italy has already spent €16 billion since last summer to try to protect poor families and small businesses from rising energy costs.

However, the Italian business lobby Confindustria called Rome’s initiative “disappointing‘ and warned that the unexpected profits tax was ‘potentially unconstitutional’. CISL, the Italian trade union confederation, called the 10 percent profit tax “too low” and pushed for an increase.

Mario Draghi

Italian Prime Minister Mario Draghi said the tax on energy company profits would be redistributed “to companies and families in difficulty” © Riccardo Antimiani/AP

Italy isn’t the only country taking advantage of energy companies’ windfall profits. The Labor Party in Britain is pushing for a tax North Sea Oil and gas companies that would otherwise reap massively financial rewards from the current price jumps. In September, Spain introduced a windfall tax for energy companies but, following industry pressure, changed it and reduced the amount levied.

Electricity prices are also likely to be a point of contention at the upcoming EU summit. Southern member states are pushing for changes to how wholesale markets operate to ease the pressure on households, but are facing stiff opposition from northern Europe.

Spain and Italy both want to see the EU change its electricity pricing rules, which have effectively pegged the price of electricity to rising gas costs and allowed renewable energy groups to charge well in excess of costs.

Rome and Madrid are also urging the EU to jointly negotiate energy purchases to secure better deals, particularly for pipeline gas sourced from Russia, which would reduce payouts to Russian energy companies.

“I can’t say that this would be the optimal moral solution, but it would have an impact,” said Roberto Cingolani, Minister for Ecological Transition.

Engaged in intense diplomacy, like-minded leaders of Italy, Spain, Portugal and Greece met last Friday to try to build momentum for their proposed energy market reforms.

That evening, Spanish Prime Minister Pedro Sánchez dined with German Chancellor Olaf Scholz – one of the key figures Madrid must convince – and Sánchez will travel to Paris on Monday to meet French President Emmanuel Macron.

But diplomats warn there is no consensus on any of these market reforms, which some say could undermine incentives for new renewable energy investments. Some countries like the Netherlands argue that in the short term the focus should be on saving energy and filling up gas storage.

Additional reporting from Sam Fleming in Brussels, Daniel Dombey in Madrid and Andrew England in London According to Germany, it has signed a long-term gas supply agreement with Qatar

Adam Bradshaw

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