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Politics

Biden to Meet Qatar Leader as Europe Energy Crisis Looms

January 31, 2022

WASHINGTON — President Joe Biden is hosting the ruling leader of Qatar at the White House on Monday as he looks for the gas-rich nation to step up once again to help the West as it faces the prospect of a European energy crunch if Russia further invades Ukraine.

Qatar played a central role in aiding last summer’s U.S. military evacuations of Afghan helpers and U.S. citizen in Afghanistan, hosts the biggest American air base in the Middle East, and served as a go-between with the Taliban for the last three U.S. administrations as they tried to wind down America’s longest war.

Now, with s ome 100,000 Russian troops massed at the Ukraine border, experts say Qatar — the world’s second-biggest exporter of liquified natural gas, or LNG — is eager to help Biden again but might only be able to offer limited assistance if Russia further disrupts the flow of energy supplies to Europe.

“Qatar sees this as an opportunity to further improve its relationship with the U.S. after Afghanistan,'” said Yesar Al-Maleki, an energy economist at the Middle East Institute in Washington. “But it is going to be very hard to do because there isn’t excess supply.”

Qatar is already producing at full capacity with much of its supply under contract to Asia. Even if some Pacific allies of the U.S. — including India, Japan and South Korea — are persuaded to divert some LNG orders it has contracted to Europe, it will only have a small impact in softening the blow, according to energy analysts.

The White House said that Biden and Qatar’s ruling emir, Tamim bin Hamad Al Thani, would also use Monday’s meeting to discuss Middle East security and the situation in Afghanistan, where humanitarian conditions have deteriorated in the aftermath of last year’s U.S. military withdrawal and Taliban takeover.

But efforts to draw contingency plans should Russia move to cut Europe from gas supplies is perhaps the most pressing matter on their agenda.

Natural gas future prices surged last week amid growing market fears a potential conflict could disrupt Russian exports transiting through Ukraine to Europe. The crunch has been worsened by Russia, which typically supplies about 40% of Europe’s natural gas supply, reducing its exports by about 25% in the fourth quarter of 2021 compared with the same period in 2020 despite high worldwide prices.

Any Russian invasion into Ukraine would almost surely trigger economic sanctions from the U.S. and its European allies. That could lead to oil and gas shortages around the world and, most likely, higher energy prices that could send tremors through the global economy.

Russia has repeatedly said it has no intention of invading Ukraine even as the Biden administration has warned that military action could be “imminent.” Kremlin spokesman Dmitry Peskov has dismissed concerns that Russia could cut off European gas supplies as “fake hysteria.”

Biden administration officials heaped praise on Qatar for assisting the U.S. military evacuation of thousands of U.S. citizens and Afghans during the chaotic ending to the American war with the Taliban. Qatar continues to operate passenger flights for fleeing Afghans and U.S. and has served as a way station for the U.S. as it processes visas for thousands of people fleeing Taliban control. Qatar’s ambassador in Kabul even personally escorted convoys of evacuees to the airport to help ensure their safe passage.

Biden, according to the White House, told al Thani in a private phone call last year that the Afghanistan evacuation “would not have been possible without the early support from Qatar to facilitate the transfer of thousands of people daily.”

“Many countries have stepped up to help the evacuation and relocation efforts in Afghanistan, but no country has done more than Qatar,” Secretary of State Antony Blinken said during a September visit to Doha. Blinken spoke last week with Qatari Foreign Affairs Minister Mohammed bin Abdulrahman Al-Thani about the Russian troop buildup, according to the State Department.

The relationship is improved after difficulties with President Donald Trump. The Republican supported a blockade launched in 2017 against Qatar by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt.

Trump also publicly accused Qatar of being a “a very high level” funder of terrorism but later reversed his position on the blockade. Saudi Arabia and other neighbors have accused Qatar of tolerating or even encouraging support for extremist groups, including al-Qaida’s Syria branch, the Muslim Brotherhood and Hamas.

The Biden administration says the still developing contingency plan won’t just lean on “one or two” suppliers. Instead, the effort would require “rather smaller volumes from a multitude of sources” to make up for a Russian cutoff, according to a senior Biden administration official who spoke on the condition of anonymity.

Suppliers in Australia — the world’s biggest LNG supplier — as well as Italy, the Netherlands, Norway and United States are among those that Biden administration officials have looked to assist if needed.

Biden and EU Commission President Ursula von der Leyen in a joint statement Friday said that they were working to ensure “sufficient, and timely supply of natural gas to the EU from diverse sources across the globe to avoid supply shocks” as they build contingency plans.

Craig Pirrong, a professor of finance and energy markets at the University of Houston, noted Qatar and United States’ LNG export facilities, which turn gas into liquid form so it can be transported over long distances, have been running near capacity for months as economies have recovered from the coronavirus pandemic and demand has picked up.

The world’s big suppliers could potentially eke out marginal additional supply if natural gas prices spike even higher, but analysts said a market squeeze could prove unavoidable.

“The market is going to allocate the gas to where the demand is high,” Pirrong said. “Supplies that would have otherwise gone to Asia, will go to Europe, and that will cushion some of the impact in Europe. But it’s just not going to replace that much lost supply if the Russians cut off the gas.”

 

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