According to sources from the Spanish government, Madrid is slated to sign a $300 billion deal with Qatar’s sovereign wealth fund, wherein the latter will invest in Spanish projects that are funded by European Union COVID recovery funds. The deal could be signed during the Gulf state ruler’s visit to Madrid later this week.
The bilateral deal represents the first major agreement between a European nation and a non-EU country aimed at leveraging the reach of the EU’s Next Generation programme, from which Spain will receive $73.33 billion (€70 billion euros).
“A deal could be signed between the Qatar Investment Authority (QIA) and Spain’s investment agency Cofides during Emir Shekih Tamim bin Hamad Al-Thani’s visit to Madrid,” said a source. “The investments in sustainability and digitalisation projects are due to be implemented within two to three years, according to that person”.
The source went on to add, “QIA has a budget that is practically 40% of Spain’s GDP… their investments are very concentrated in Asia and they want to invest more in Europe” without providing specific figures.
According to the source, Spain aims to increase Liquefied Natural Gas (LNG) imports from Qatar and guarantee gas supply. While Qatar has spare LNG terminal capacity, Spain wants to position itself as a gas supply hub for EU nations seeking to reduce their energy dependence on Russia.
In 2019, before the COVID-19 pandemic upended supply and demand worldwide, LNG from Qatar, the world’s biggest LNG exporter, accounted for 11% of Spain’s gas imports. Since then Algerian, Nigerian, Russian and American exports have taken a bigger role, according to Spain’s oil and gas agency CORES.
Currently, Spain’s biggest LNG company Naturgy has two contracts with Qatargas, a subsidiary of Qatar Energy, each with an annual contract quantity of 0.75 million tonnes per annum. While one contract runs until 2024, the other ends at 2025.
According to a source from Qatargas, it had no immediate plans to extend or broaden its agreements with Naturgy.
Repsol, Spain’s other leading LNG company, declined to comment on a possible deal to buy Qatari gas.
Currently, Qatar exports 77 million tonnes of LNG per year and aims to increase it to 126 million tonnes by 2027.
According to a source from within the Spanish government, it is too early to say how much of the increased capacity could be destined for Spain; the source also acknowledged that Spain’s LNG hub ambitions were constrained by its lack of re-export capacity towards the north.
“For now, our export capacity is low but it is in our interest to guarantee gas supply”, said the source.
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