EU-GCC energy partnerships: A turning point in ties?

On 24 September, Germany’s Chancellor Olaf Scholz conducted a two-day tour of the Gulf Cooperation Council (GCC) states, seeking to secure new energy partnerships for Germany and Europe in a bid to diversify away from the Eurozone’s dependency on Russian gas.

The German Chancellor praised the visits as fruitful, with the aim of completely moving away from Russian energy by mid-2024.

Scholz met Abu Dhabi’s Crown Prince Mohammed bin Zayed Al Nahyan to sign an accord on energy cooperation and discuss the country’s hosting of next year’s UN climate talks.

German utility company RWE announced on Sunday that it will receive the first shipment of liquefied natural gas from the Abu Dhabi National Oil Company by the end of this year.

"Germany has spearheaded efforts to establish new partnerships for Berlin and Europe as alternatives to Russian energy"

The shipment will consist of 137,000 cubic meters, with further deals expected next year. Other smaller deals were agreed, including RWE and UAE-based Masdar exploring further offshore wind energy projects, the company said.

Hailing Berlin’s success in securing new deals with the GCC, Scholz also visited Saudi Arabia, without securing a deal.

During his GCC tour, Scholz’s last visit was to Qatar. The talks between Doha and Berlin follow on from an agreement in May to establish an energy partnership, with a focus on trade in hydrogen and liquefied natural gas (LNG). The deal aims to come into place in 2024.

Europe’s economy has suffered in recent months amid Russia’s war in Ukraine, which has contributed to a sharp spike in energy bills for European consumers, particularly within states which depend more on Russian gas.

For Germany in particular, this has become more crucial given its considerable dependency on Russian gas, and after Moscow announced the indefinite closure of the Nord Stream pipeline to Germany on 2 September.

Thus, Germany has spearheaded efforts to establish new partnerships for Berlin and Europe as alternatives to Russian energy.

Such developments set the framework for new cooperation between the EU and the GCC, potentially undermining a period of indifference and even distance from Brussels towards the Gulf bloc.

It comes as Scholz also recently announced a substantial aid package for German citizens, following similar policies by other nations in the European continent.

Naturally, the GCC states would enjoy more economic and political benefits from further deals, yet it could also hinder the European Union’s ambitions to move away from fossil fuels and achieve net zero by 2050 in the fight against climate change.

Despite current talks, the EU has yet to form a conventional bilateral agreement with the GCC, with proposed talks of a free-trade deal having broken down in the past, namely in 2008.

Following the visit, a German official said that the three Gulf countries are "important regional partners,” while other observers noted the meetings were a ‘turning point’ in EU and GCC relations. It certainly signals that Germany will adopt a new foreign policy in the region, given that it is prioritising new energy agreements.

With Germany continuing to pursue deals, the GCC states could further bolster ties with the EU, thus acting as a soft power move within Europe and weakening EU criticism of GCC countries, particularly over issues like human rights.

Indeed, even though Scholz did not secure a deal with Saudi Arabia during his recent visit to Riyadh, the Saudi kingdom in particular could benefit from closer ties with the EU, following scrutiny over Crown Prince and Prime Minister Mohammad bin Salman’s rule.

"Such developments set the framework for new cooperation between the EU and the GCC, potentially undermining a period of indifference and even distance from Brussels towards the Gulf bloc"

Germany’s keenness to sign deals with the GCC could even lead to the EU exploring other regional oil partnerships in the future. One potential supplier could be Iraq, particularly as the country has the fifth-largest crude oil reserves in the world.

Despite conflict and sanctions over the past 40 years which have devastated the country’s infrastructure, post-war Iraq is seeking to bolster its infrastructure and production capabilities. Moreover, it has the potential to benefit economically from the rise in oil prices following the Ukraine war.

Yet Iraq has so far mostly acted as a regional exporter, having inked deals with Jordan and Egypt in the last year. Baghdad has also made some minor agreements to export with Europe, but more corresponding ships would be needed to ensure that Iraq can increase its export capacity to the continent.

Moreover, ensuring that Iraq enjoys lasting stability and improved infrastructure would be a natural prerequisite for any talks.

Despite Washington pressuring its allies to sever ties and heap economic pressure onto Russia throughout the Ukraine crisis, GCC states like the UAE, Saudi Arabia, and Qatar have been able to adopt a balancing act between Moscow and NATO, thus avoiding punitive measures from Washington.

Berlin’s keenness to form energy partnerships further testifies that leading GCC states will continue to maintain ties with both NATO and Russia, and other energy partners such as China and Japan.

In other words, the EU’s urgency to secure new energy partnerships would mean that GCC states can further gain the EU’s acceptance for exporting to non-European partners – even Russia - meaning the GCC could hold more of the cards in future energy negotiations.

Concerns have also been raised over how the energy crisis could impact efforts to move towards more renewable energy sources, given the EU’s need to resolve its energy crisis.

"The EU's desperation to gain energy partnerships has shown it could ignore policies within the GCC that it may otherwise have previously been uncomfortable with"

Even though the EU will continue to pursue the funding of renewable energy sources, which has been a partial source of tension between the GCC and EU, its quick-fix desires to establish partnerships with the GCC could partly hinder its overall vision in the short to medium term.

"Sadly, the growing economic burden has fizzled the euphoria over the series of energy transition plans, causing severe erosion in public support for reducing carbon emissions," QatarEnergy CEO and state minister for energy Saad al-Kaabi recently told a liquefied natural gas (LNG) conference in Japan.

“Many countries particularly in Europe which had been strong advocates of green energy and carbon-free future have made a sudden and sharp U-turn. Today, coal burning is once again on the rise reaching its highest levels since 2014."

In the meantime, Scholz’s visit to the Gulf signals that further deals between the EU and GCC are likely to be expected, thus alleviating the period of distance between the two blocs. This would give greater advantages to the three leading GCC states, indicating that they would gain politically as well as economically from more business with Europe.

Additionally, the EU’s desperation to gain energy partnerships has shown it could ignore policies within the GCC that it may otherwise have previously been uncomfortable with, thus potentially further weakening its future clout in the Middle East.

Jonathan Fenton-Harvey is a journalist and researcher who focuses on conflict, geopolitics, and humanitarian issues in the Middle East and North Africa

Follow him on Twitter: @jfentonharvey