(Bloomberg) — European proposals to set limits on the price paid for natural gas are “hypocritical,” Qatar’s energy minister Saad Al Kaabi said in an interview with Bloomberg TV.
The European Commission intends to propose a cap on gas prices using a dynamic price mechanism, which could be in place as soon as this winter, in an effort to curb volatile fuel costs.
But interfering in markets contradicts the competition rules that Europe previously applied to producers, said Kaabi, who is also chief executive of the world’s biggest liquefied natural gas producing company, Qatar Energy.
“The free market is always the best solution,” he said on Sunday.
Capping the price of natural gas also reduces incentives to invest in gas production and could deprive some buyers of supplies. Rival importers may attract cargoes that would otherwise go to Europe by offering just one cent more, he said.
The European Commission closed its near four-year antitrust investigation into Qatar’s deals to supply LNG to European companies in March. The probe was established in response to concerns the producer’s supply agreements restricted the ability of EU gas importers to sell the LNG in alternative destinations within the bloc’s internal market.
Europe’s difficulties will persist until at least 2025 if winters are harsh and Russian pipeline flows don’t return to normal levels, he said. Qatar Energy is still negotiating with German companies RWE AG and Uniper SE for LNG supplies and is in advanced talks with some Asian buyers, he said.
READ: Conoco Is Final Energy Major to Invest in Qatari LNG Project (1)
Attempts by European leaders this year to secure more volumes from Qatar have been largely unsuccessful, as Qatar has been producing beyond its installed capacity for the super-chilled fuel for years.
Qatar had pledged to refrain from diverting cargoes away from Europe, even though it’s contractually allowed to re-route supply, after Russia’s invasion of Ukraine in February sent European gas prices rocketing. Qatar is sticking to that, but “nothing is permanent and we have the right to do what we like with our volumes,” said Kaabi. “But it was a promise that we made for a certain duration. When it’s appropriate for us to divert, we will.”
It plans to expand output capacity by more than 60% to 126 million tons per annum by the end of the decade through the North Field East development, scheduled to start up in 2026, and North Field South, which will be ready to export in 2027.
