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  • Germany's Qatari Connection // France Fined $520m for Failing Renewables Purity Test // Russian Diesel Stoppage

Germany's Qatari Connection // France Fined $520m for Failing Renewables Purity Test // Russian Diesel Stoppage

Germany's Qatari Connection

Qatar is supplying Germany with liquified natural gas in a long-term deal.

"State-owned Qatar Energy and ConocoPhillips have signed agreements that will see the Persian Gulf state send up to 2 million tons of LNG a year to Germany from 2026," reports Bloomberg. "The deals will last at least 15 years, Qatar’s energy minister, Saad al Kaabi, told reporters in Doha alongside Ryan Lance, ConocoPhillips’ chief executive offer."

This means fossil fuels will be with Germany until the 2040s as Javier Blas pointed out. 

But the Qatari LNG contract is only 6% of the 46 billion cubic meters of natural gas Germany imported from Russia last year. That reveals both the gulf of supply Germany will have to make up for next year and how competitive the European market is getting. The continent is already snatching up LNG from far-flung countries like Australia, rerouting gas that normally routes to Asia.

"The five import facilities chartered by the German government will cost a total of €6.5 billion ($6.7 billion) over the next 10 to 15 years. There is also one privately chartered terminal planned," reports Bloomberg.

So, what about Germany's climate aspirations? “I also wouldn’t be opposed to 20-year or even longer contracts,” Robert Habeck, Germany’s economy minister said. “The companies should just be aware that the buying side in Germany will become smaller, if we want to keep the climate goals.”

Here's a snapshot of Germany's electricity consumption yesterday morning.

France Fined $520m for Failing Renewables Purity Test

France has missed its renewables deployment targets and will thus face fines as punishment. 

"It will cost France €500 million [~$520 million] this year for not having met its target for renewable energy," the Minister for Energy Transition Agnès Pannier-Runacher told MPs on Monday.

"France is the only one of the 27 EU member states to have missed its goal two years ago. Renewable energy represented just 19.1% of its gross final energy consumption, well below the 23% target," reports Le Monde. "As this target is binding, France must now buy 'statistical amounts' of renewable energy through a European mechanism from 'good performers' who have exceeded their target."

As we can see, France is far cleaner than Germany, the renewables darling of Europe. 

Here's a breakdown of French electricity consumption to compare to Germany's in the previous section.

France has one of the cleanest electrical grids in Europe thanks to its nuclear buildout in the 1970s. Now, it's being punished for having the wrong kind of clean energy. To make matter worse, France's nuclear performance has been hindered by its over-investment in renewables and underinvestment in its nuclear fleet. Corrosion problems have taken several reactors offline for maintenance. 

Russian Diesel Stoppage

Europe and the UK are still painfully reliant on Russian diesel.

"The European Union and UK received almost half their waterborne imports of diesel-type fuel from Russia in the first 24 days of this month," reports Bloomberg. "The level of reliance jumped sharply from October, when the region’s overall imports surged to cope with strikes that knocked out French oil refining capacity."

Seaborne diesel from Russia is to be met with a ban in February 5, leaving both the continent and the crown in a tight spot.

"The EU and UK received about 600,000 barrels a day of diesel-type fuel in shipments from Russia during November 1-24, 45% of total arrivals," reports Bloomberg. "In October they took 34% from Russia and the average for the first 10 months of the year was 51%."

An absence of diesel would destroy the European economy overnight. Diesel and the diesel engine are the pumping heart of the transportation sector.

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Conversation Starters

  1. Another no-go for the price cap on Russian oil in Europe. "European Union governments failed to agree on Monday on a price cap on Russian seaborne crude oil, as Poland insisted that the cap had to be set lower than proposed by the G7 to cut Moscow's ability to finance its invasion of Ukraine," reports Reuters. "There is no deal. The legal texts have now been agreed, but Poland still can't agree to the price," one diplomat told the publication. 

  2. Global oil inventories have been on the rise. “Global onshore crude oil inventories built by nearly 70 million barrels in the last four weeks, or close to 2.5 million barrels per day, reaching the highest weekly average since September 2021,” geo-analytics firm Karyos said in a report sent to Rigzone. “On its face, the gain does not appear to support calls for increased OPEC output ahead of the producer group’s December 4 meeting and the coming into effect of the EU embargo on Russian crude imports on December 5," Karryos said.

  3. China's buying heaps of corn from Brazil and it's making European corn buyers anxious, since they source Brazilian corn as well. "China, which generally purchases from the US and Ukraine, is interested in Brazilian corn. China has sought to diversify its sources of corn imports after Russia invaded Ukraine on Feb. 24 rather than relying mostly on the US. Key export agreements between China and Brazil were concluded in May, with the first shipment of 67,000 mt of Brazilian corn en route to China Nov. 23," reports S&P Global. 

Crom's Blessing