GAS AND POWER: Gas markets start to look less oversupplied as Qatar crisis worsens
| Date | 01 July 2017 |
| DOI | http://doi.org/10.1111/oet.12488 |
| Published date | 01 July 2017 |
GAS AND POWER
Gas markets start to look less oversupplied as Qatar crisis worsens
By now there should have been a massive global over-
supply of liqueed natural gas (LNG), accompanied by
rock bottom prices, as a result of all the schemes that
have started since 2014. New export terminals, mainly in
Australia, have added about 8.5 bn cfd to global capacity,
compared with demand growth of just under 4 mn cfd.
While there is excess capacity, it is rather less than orig-
inally anticipated thanks to a series of outages at termi-
nals in Angola, Egypt, Libya, and Yemen. Added to these
inrecentweeksisapoliticalcrisisinthePersianGulfthat
threatens to disrupt the export of LNG from the world’s
large st su ppl ier, Q atar.
Démarche in the Gulf
In early June, Saudi Arabia, UAE, Bahrain, Egypt, and
some of their allies imposed a number of sanctions
on Qatar, claiming it was supporting terrorism because
of its ties with Iran and Eg ypt’s Muslim Brotherhood.
e measures included banning ships calling at ports in
Qatar from their own ports. While these measures ini-
tially aected Qatari exports of oil, owing to the fact
that some of its expor ts are co-loaded with crude oil
from Saudi Arabia and UAE, LNG exports were not
aected.
Concerns were nevertheless raised about the possi-
bility of an escalation of the dispute. Spot gas prices
in Europe rose as uncer tainty about the situation grew.
Europe imports about 2.3 bn cfd of LNG from Qatar.
Asian customers were generally more relaxed about the
situation in the short-term, although there were con-
cerns that insurance rates for LNG carriers wouldris e as
a result of the crisis. Asia takes some 6.6 bncfd of Qatari
LNG, out of the emirate’s total exports of 10.1 bn cfd (see
TableE).AnotherconcernforEuropeanbuyersisthe
possibilitythatEgyptwillbanQatarigascarriersfrom
the Suez Canal, although there appeared to be no imme-
diate move to do this.
ere seems to be no immediate solutionto the crisis,
as Saudi Arabia and its allies make demands on Doha
that the government will nd totally unacceptable.
eresultofthecrisisislikelytobethatQatarmoves
closer politically to Iran, which Riyadh sees as its main
opponent in the region , making a solution all t he more
remote. In the meantime, Qatar continues to supply
LNG to UAE and Egypt and pipeline gas to UAE, though
both countries may start looking elsewhere for supplies.
An ill wind?
Prolonged uncertainty over Qatar’s gas exports could
help a number of rival exporters, both in the short and
long-term. Several of them might be able to supply spot
Table E
Qatar: Gas Prole, 2016
Proven Reserves 858.1 tcf∗
Reserves Remaining 134.5 years†
(bn cfd)
Production
Total 17.5
Consumption
Total 4.0
Exports‡
LNG
Asia 6.6
Europe 2.3
Other 1.2
Total 10.1
Pipeline
Middle East 1.9
Total 1.9
∗As of 1.1.17
†Based on 2016 production
‡Contract volumes only; therefore may differ from actual deliveries
Totals rounded
Source: (Reserves) Oil & Gas Journal
(Other) BP Statistical Review of World Energy,2017
cargoes to any nervous buyers. e prospect of reliable
and safe supplies might also prove a selling point for
gas producers hoping to sign long-term contracts in the
near future. e situation could provide a boon to US
exporters now in search of new customers.
ExcludingsmallvolumesfromAlaska,mainlytoother
parts of the Americas, the US only began exporting LNG
at the beginning of last year, since when its exports have
climbed steadily to an estimated 1.9 bn cf in May 2017.
ereis,however,exportcapacitytospareintheUS
Gulf and gas sellers in the Lower-48 have been trying to
open-up new markets with a series of spot sales, some of
which are reported to have been at a loss.
A prolonged Qatari crisis should help the returns on
future sales and could boost global LNG sport prices
generally. US sales have been to a variety of markets,
including Asia, Latin America, the Middle East, and
Europe. Two of the most recent sales have been to the
Netherlands and Poland, marking the rst time that
liquid petroleum gas (LPG) from the US has been landed
in North West and Eastern Europe. Europe is a dicult
market for new entrants such as the US, owing to the
dominant position of Russia and Norway.
Eastern promise
e delivery to Poland is of particular importance as far
astheUSisconcernedsincePolandistryingtoestablish
© 2017 John Wiley& Sons Ltd
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