RWE sees its LNG business growing with benefit of Qatar deal. RWE plans to expand its liquefied natural gas business by making the most of its supply contract with Qatar to meet Europe’s growing dependency on fuel imports. RWE Supply & Trading physically delivered 2.5mn tonnes of LNG last year – equivalent to almost four days of global demand – mainly to the Middle East and Asia, Andree Stracke, chief commercial officer at the German utility’s trading unit, said in an interview at the Flame gas conference in Amsterdam last week. Last year, it signed a 7 1/2-year flexible contract with Qatargas to deliver 1.1mn tonnes of LNG a year to northwest Europe.
“We will see a cargo coming in the next days and we are pretty confident that Qatargas has a high interest to deliver more volumes to Europe in the years to come,” Stracke said on Wednesday. “I strongly believe there are opportunities beyond this contract.” Qatar is the biggest supplier of LNG to Europe, which gets most of its gas through pipelines from Russia and Norway. As the region’s domestic gas output declines and demand emerges for power generation, new suppliers such as the US are seeking to enter the market.
Higher demand in Asia and emerging markets meant that Qatari LNG exports to Europe fell to about 18mn tonnes in 2016 from 21mn tonnes in 2015, according to GIIGNL, a Paris-based importers’ group. Against expectations, no glut of LNG is yet moving to Europe. RWE plans to increase its LNG portfolio but has no volume targets for this year or next, Stracke said.
“LNG is the molecule that is connecting the worldwide gas markets like coal is a worldwide commodity,” he said. “We need to be active in that field and, especially in Asia, we see more opportunities.” RWE has gas portfolio of 30bn cubic metres. “We have pretty much cleaned up our entire gas portfolio with regard to price exposures. We have seen a huge reduction of long-term contracts and, after the renegotiation period, we now try to maintain the portfolio size of 30bn cubic metres by getting new medium and long-term contracts. The key condition is it needs to be risk manageable,” he said. RWE is “pretty comfortable with our situation with Gazprom for foreseeable future,” he said, referring to the long-term gas supply contract renegotiated last year.