Qatar seeks to bolster Spain’s EU-funded COVID recovery projects and supply more LNG

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MADRID — Qatar’s $300 billion sovereign wealth fund plans to invest in Spanish projects funded by the European Union’s COVID stimulus funds under a deal to be signed during the leader’s visit. Gulf state in Madrid this week, Spanish government sources said on Tuesday.

The bilateral agreement represents the first major agreement between a European country and a non-EU country aimed at taking advantage of the reach of the EU’s Next Generation programme, from which Spain will receive 70 billion euros (73 .33 billion dollars).

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It is expected to be signed between the Qatar Investment Authority (QIA) and Spanish investment agency Cofides on Wednesday during the visit of Emir Shekih Tamim bin Hamad Al-Thani to the Spanish capital, one of the sources said. Investments in sustainability and digitization projects should be implemented within two to three years, according to this person.

“QIA has a budget that is almost 40% of Spain’s GDP…their investments are very concentrated in Asia and they want to invest more in Europe,” the source said, without providing specific figures.

ENERGY HUB AMBITIONS

Spain wants to increase liquefied natural gas (LNG) imports from Qatar to secure gas supplies, the source said. The Mediterranean nation has unused LNG terminal capacity and the largest number of LNG regasification plants in Europe and aims to position itself as a gas supply hub for EU countries looking reduce their energy dependence on Russia.

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In 2019, before the COVID-19 pandemic disrupted global supply and demand, LNG from Qatar – currently the world’s largest exporter – accounted for 11% of Spain’s gas imports. Since then, exports from Algeria, Nigeria, Russia and the United States have played a bigger role, according to Spanish oil and gas agency CORES.

The main Spanish gas company Naturgy currently has two contracts with Qatargas, a subsidiary of Qatar Energy, to receive a total of 1.5 million tonnes per year until 2024 and 2025 respectively. A company source told Reuters it has no plans to extend those contracts.

Repsol, the other major Spanish gas company, declined to comment on a possible deal to buy Qatari gas.

Qatar currently exports 77 million tonnes of LNG per year but aims to reach 126 million tonnes by 2027.

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The Spanish government source declined to say how much of the increased capacity might go to Spain and acknowledged that Spain’s hub ambitions were limited by its lack of re-export capacity to the north. “At the moment our export capacity is weak but it is in our interests to secure the gas supply,” he said.

The Emir of Qatar landed in Madrid on Tuesday and met with the King and Queen of Spain. Other agreements with Spanish companies are expected to be announced during his visit, including potentially with the Spanish electrician Iberdrola, of which the sovereign wealth fund of Qatar is the main shareholder. ($1 = 0.9546 euros) (Reporting by Belén Carreño and Isla Binnie, additional reporting by Andrew Mills from Doha; editing by Aislinn Laing and Tomasz Janowski)

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Edward K. Thompson